The Major Catalysts for the Micron
Technology MU Weekly Options
are by far the largest users of memory produced by companies like Micron
Technology MU. Thanks to the growing use of artificial intelligence (AI)
systems, the Internet of Things, and smart cars, among other things, the demand
for data centers has expanded rapidly. This trend is unlikely to slow down
anytime soon as we move into the 5G era, which will allow for even higher data
consumption and commensurately greater storage requirements.
The need for
high-speed computing to carry AI workloads, the movement toward heterogeneous
computing systems, and the displacement of hard disk drives by solid-state
drives, are a few other factors driving higher demand for memory and data
storage. The tailwinds are evident in the fact that Micron's data center
revenue grew by 70% year-over-year in its fiscal 2022 first quarter, which
ended Dec. 2.
opening remarks on the fiscal Q1 earnings call, President and CEO Sanjay
Mehrotra said that the growth in memory and storage for data centers will
outpace the general market over the next decade. If he's right, the tailwind
propelling Micron will last for years, if not decades.
Mobile Phone Upgrade.....
major shift that will benefit Micron Technology MU is the movement from 4G to 5G
smartphones. 5G networks offer significantly faster download speeds, so users
with 5G mobile devices will naturally use them to do more and to run
content-heavy apps more often. But network speed alone will not do the job.
Those smartphones will also need to have the built-in hardware to handle those
us to the main point: 5G smartphones will need a lot of memory and data storage
to run smoothly. According to Mehrotra, recent 5G smartphones have 50% more
DRAM (dynamic random-access memory) and twice the amount of NAND (non-volatile
flash memory) compared to 4G phones. Both should rise even further as
manufacturers continue to make ever more powerful phones.
transition from 4G to 5G phones has already profited the tech company. Micron reported
a 27% increase in revenue to $1.9 billion from its mobile phone division in its
latest quarter. This growth trend could continue for a long time as people
gradually upgrade their devices.
widespread adoption of 5G phones will drastically increase the world's memory
and storage needs. But those increases pale in comparison to the memory and
storage requirements our smart cars will have. Presently, electric vehicles
with Level 3 autonomous driving systems installed require more than 140
gigabytes (GB) of DRAM memory and 1 terabyte (TB) of NAND storage. By
comparison, an iPhone 13 uses 4 GB of RAM and a maximum of 512 GB of storage.
As we move closer toward Level 5 autonomous driving systems, automakers' demand
for memory and storage will continue to explode.
So far, Micron
Technology MU has gotten around 10% of its revenue from its automotive and industrial
business. That percentage will rise. On the earnings call, Mehrotra said
management expects "automotive and
industrial to be the fastest-growing memory and storage markets over the next
decade." All Micron's shareholders will have to do is buckle up and
enjoy the ride.
Israel Englander is an American hedge fund investor
who is responsible for the investment strategies of the hedge fund Millennium
Management. Millennium Management is one of the largest hedge funds in the
world, and it is based out of New York, New York, United States.
to Englander, Micron
Technology MU, one of the world's largest semiconductor firms that targets the
memory segment, fits their portfolio. The chip industry is divided into memory
and non-memory segments, and the former consists of products such as random
access memories (RAMs) that are used in a variety of markets that cover both
personal and enterprise computing.
Englander's hedge fund owned 827,243 Micron Technology shares by the end of Q4
2021. These were worth $77 million and represented 0.03% of its portfolio.
Technology MU brought in $7.69 billion in revenue and $2.16 in non-GAAP EPS for
its fiscal Q4. These let it beat analyst estimates for both and the investment
firm Wedbush raised the company's price target to $120 from $100 in February
2022. To justify its decision, the firm highlighted that the growth in the
semiconductor sector will spell positive demand for the company. Micron
Technology also introduced a new memory for the fast growing datacenter segment
in March 2022.
Technology’s largest investor is Paul Marshall and Ian Wace’s Marshall Wace
LLP. It has a stake of $507 million through owning 5.4 million shares.
Capital Partners mentioned Micron Technology in its Q3 2021 investor letter.
Here is what the firm said:
“It’s hard to explain how shares of Micron
Technology MU, manufacture of DRAM and NAND semiconductor chips, can
fall during a global chip shortage. In most industries, focusing on demand can
give you a clear insight into what lays ahead for a company. Today, the memory
and storage chip industry is no different. However, in the past, companies
focused on market share led to the reckless build out of chip fabrication
plants (FABs), oversupply, falling average selling prices (ASPs) of memory and
storage chips, lower margins, and declining cash flows. As the industry
consolidated – there are now just 3 major producers of DRAM and 5 on the NAND
side – rational behavior among the key players began to take hold as
competitors began focusing more on R&D. Currently, chip pricing remains
cyclical although less so than in the past and that cyclicality has a long-term
upward bias. The ongoing transition to newer and more robust platforms (3D
176-layer NAND & 1-Alpha node DRAM) has provided the memory and storage
chip industry with improved supply capacity under its current manufacturing
footprint, ultimately pressuring ASPs. Over the past three years, as most of
the large platform conversions have already taken place, being able to add more
bits per wafer has reached a saturation point. With no major FAB build outs
planned in the near-term by competitors Samsung or SK Hynix, constrained supply
and flattening cost curves should lead to durable and upward sloping ASPs once
the recent volatility from the chip shortage subsides.
Currently Micron Technology MU trades
at just 8x 2022 estimate earnings. MU is expecting growth in both DRAM and NAND
not just from the supply of more chips to data centers, artificial
intelligence, the auto sector, and mobile devices, but also from greater demand
for gigabyte capacity per unit within those segments. With a healthy balance
sheet, improving return on invested capital, and expanding cash flows, not only
should Micron benefit from improving future earnings but its multiple should
also reflect the transition to a flattening cost curve.”
Global semiconductor revenue in 2022 is forecast to
grow 11% and reach a record-high of $680.6 billion, and this is after revenue
soared 25% in 2021 according to IC Insights. The world's thirst for
semiconductors is driven by the abundance of cell phones, portable technology,
5G and even the budding market for IoT (Internet of things) devices.
Value investor Mohnish Pabrai's top U.S. holding as
per his latest 13F report is Micron Technology Inc., which is poised to benefit
from these trends as the fourth-largest semiconductor company in the world.
been investing in Micron Technology MU for a very long time. Most recently, he
added 15% to his position in the fourth quarter of 2021, during which shares
traded for an average price of $78.57. Pabrai has often stated that he is not
afraid to make focused bets and would be happy to hold a single stock if he
knew it had the best return potential.
The shares of Micron Technology MU have received a $94 price target from
Bernstein. And Bernstein analyst Mark Li upgraded Micron Technology from a
“Market Perform” rating to an “Outperform” rating while increasing the price
target from $58.
Micron to Outperform as the macro concerns have prompted a selloff, but a
correction to the memory market, if any, won’t be prolonged & won’t change
the structure,” wrote Li in a research note.
Li also noted that the Russian invasion of Ukraine is not expected to
cause a "notable" disruption in supply or hurt demand and even with
the current oversupply in the DRAM market, it's likely to balance out in the
next quarter or two and prices will rebound.
Li also noted that China has yet to break the DRAM oligopoly, which
includes Micron, which should help the market.
latest checks indicated continued struggle in 17 [nanometer] with poor yield
and further schedule delay," Li wrote.
In addition, Li noted that Micron
Technology MU is likely to see prices for DRAM rise
later this year, going into 2023 before declining in 2024. "Supply discipline will keep the decline mild so that shipment
increase still brings revenue and earnings growth then," Li added.
Last month, Citigroup reiterated its buy rating on Micron, noting that
dynamic random access memory pricing could be higher in the second half of the
According to the issued ratings of 28 analysts in the last year, the
consensus rating for Micron Technology stock is Buy based on the current 4 hold
ratings, 23 buy ratings and 1 strong buy rating for MU. The average
twelve-month price target for Micron Technology is $113.62 with a high price
target of $165.00 and a low price target of $70.00.
Micron is a
fantastic company and a true leader in the semiconductor industry. The firm is
ahead of its competitors in many technological areas and continues to innovate.
They are growing fast and increasing margins.
The semiconductor industry is tremendously fast-paced, volatile and
cyclical. Thus, expect lots of this moving forward.
Shares of MU stock traded down $1.11 during trading hours on Friday,
reaching $79.41. 28,056,955 shares of the company’s stock were exchanged,
compared to its average volume of 22,018,650. Micron Technology, Inc. has a 1
year low of $65.67 and a 1 year high of $98.45. The stock has a market cap of
$88.92 billion, a PE ratio of 12.25, a PEG ratio of 0.38 and a beta of 1.17.
The company has a current ratio of 3.10, a quick ratio of 2.36 and a debt-to-equity
ratio of 0.15. The stock’s fifty day moving average price is $85.49 and its
two-hundred day moving average price is $80.82.
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