To The Moon

Everything should start from$Micron Technology (MU) $Speaking of Tuesday's financial report.

As the top memory chip manufacturer in the hardware industry, Micron continued to expand its losses in Q2 financial report for the 23 fiscal years ending March 2 this year. The EPS loss reached-1. 92 USD, which was worse than the market expectation of-0. 63 USD, while its revenue was nearly 3.69 billion USD, which decreased by more than half of the same period last year and was also worse than the expected 3.73 billion USD.

This is a very poor performance, but the market sentiment is gradually improving, thinking that "the bottom may come".

An improvement in supply and demand

Micron has pulled back by over 40% since the beginning of 2022, and underperformed the market in the rebound since the end of last year, mainly because the market is worried about the weak demand in the memory market. The poor performance in the first two quarters was also punished in the secondary market.

This quarter's performance is also the worst quarter since the epidemic, and the expansion of losses also includes the write-down of redundant inventory of 1.43 billion US dollars.

The current mood change, on the one hand, the "continuous" weakness of multiple terminal markets has promoted recovery, and it is also a change in the overall industry. On the other hand, the company resets the "data center" business, which can support the recent hot AI. It is expected to be from$Samsung Electronics (SSNLF) $Get back some market share.

From the perspective of valuation, due to the decline in performance, from the perspective of profit multiples,Meguiar's dynamic P/E is 37 times, which is also about 34 times higher than the industry average.

Because stock prices often change before performance, investor sentiment is the prophet of Spring River Plumbing Duck. Investment bank analysts have also raised their ratings and target prices for Micron:

• Barclays analysts gave a rating of overweight, believing that the "continuous" weakness in multiple terminal markets has driven the recovery, and Micron is "well positioned", especially the improvement of data centers;

• Bank of America analysts rated the stock as neutral, but the weakness in the memory market began to fade;

• Needham raised Meguiar's target price to $71 from $67, maintaining its buy rating.

• JPMorgan Chase raised Micron's target price from $65 to $75, maintaining its overweight rating.

• Susquehanna raised its target price to $90 from $65, maintaining Meguiar's positive rating.

• Hans Mosesmann, an analyst at Rosenblatt, reiterated Micron's buying and maintained its target price of $100.

Opportunities of AI

Similarly, there are also$Intel (INTC) $Bottom out. Due to the delay of the 4th generation chips, Intel has ceded a lot of market share to AMD and Nvidia.

However, at an investor event in the data center business held a few days ago, Intel released several announcements related to chips, including the timetable of future products. These include the low-power chip Sierra Forest, which is expected to be delivered in the first half of 2024, along with the next-generation chip Granite Rapids, which is currently being tested by customers. The next version of the low-power chip, Clearwater Forest, will be available in 2025.

At the same time, Intel also courted investors to say that these upgradesIt aims to popularize artificial intelligence for "everyone" and let developers train and run new models.

Obviously, with the emergence of AI and its rapid commercialization,Low power consumption will become the mainstream demand of hardware devices.

Intel may be half a beat slower in the mobile Internet era, but it can resume growth again in the AI era, which is also the place where the market is most optimistic about it at present.

From the valuation point of view, the dynamic P/E is 40 times, which is higher than the industry average of 37.8 times. The two fastest growing companies in the industry, NVIDIA and AMD's P/E, have reached 118 times and 84 times respectively.

At the current price and the expected profit level in 2024, Intel's P/E is about 18 times, NVIDIA and AMD are 46 times and 22 times respectively.

Therefore, if Intel can regain its market share in the AI era, its valuation level has great room for upward improvement.