Key points
- Micron Technology is a pioneer in the memory chip market, starting as a 4-person chip design studio in the basement of a dentist’s office in 1978 to becoming the third largest memory chip manufacturer in the world.
- Average selling prices (ASPs) for DRAM have increased in post-quarter years, but ASPs for NAND Flash memory increased 30% quarter-over-quarter in the fiscal second quarter of 2024.
- Demand for artificial intelligence (AI) servers and a healthier memory chip demand market pushed revenue up 57.7% year-over-year in the quarter.
- 5 stocks we prefer to Micron Technology
Micron Technology Inc. NASDAQ:MU stands for memory chips, just like Nvidia Co. NASDAQ:NVDA stands for artificial intelligence (AI). They are the leading manufacturer of dynamic random access memory (DRAM) and NAND flash memory. The computing and technology industry leader is an indicator of the health of the memory chip market. The recent earnings boom signals two developments in the memory chip market.
The crisis period in the memory chip market may be over, and artificial intelligence is driving the insatiable demand for data storage. Micron will directly benefit from the AI boom in the years to come as it presents a secular trend with a long run.
From a basement to number 3 in the world
Micron Technology began as a 4-person semiconductor design company in 1978 in Boise, Idaho, in the basement of a dentist’s office. The company has since evolved into a pioneer with over 50,000 patents related to memory chip design and manufacturing with over 43,000 employees worldwide. In 2023,
Micron has become the world’s third-largest DRAM chip supplier, with a 23% market share, generating more than $15 billion in annual revenue in 2023. Its largest customers are the who’s who of the tech world, including Hewlett Packard Enterprise Co. NYSE:HPE AND Dell Technologies Inc. NYSE: DELL in the AI server segment, The Apple company. NASDAQ:AAPL in the mobile segment e Amazon.com Inc. NASDAQ: AMZN, Microsoft Co. NASDAQ:MSFT AND Alphabet Inc. NASDAQ:GOOGL in the cloud and data center segment.
Volatile memory and non-volatile memory
With memory chips, there are two distinct types. DRAM chips can only save data when the computing device is turned on. It is considered “working memory”, which makes it temporary. Data is no longer saved when the device is turned off. DRAM is commonly found in tablets, notebooks, desktop computers, and smartphones.
NAND Flash memory is a non-volatile memory that retains and saves data even when the device is turned off. It is commonly used in flash storage devices such as solid state drives (SSDs), USB flash drives, and memory cards. Check the heat map of the sector on MarketBeat.
HBM3E represents the turning point for Micron
Micron’s innovative high-performance memory solution is High Bandwidth Memory 3E (HBM3E). Provides over 9.2 GPS per pin with over 1.2 TB/s per stack. It comes in stacks of 8 and 12, offering capacities of 24GB and 36GB respectively.
Micron hits the mark.
On March 20, 2024, Micron Technology reported fiscal second-quarter 2024 earnings per share of 42 cents, beating consensus analyst estimates by 67 cents for a loss of 25 cents. GAAP net income was $793 million, or 71 cents per diluted share. Non-GAAP revenue was $476 million, or 42 cents per diluted share. Revenue increased 57.7% year over year to $5.82 billion, beating consensus estimates of $5.35 billion. Operating cash flow was $1.22 billion, versus $1.40 billion in the prior quarter and $343 million in the year-ago quarter. Non-GAAP gross margin was 20%, up from 0.8% in the fiscal 2024 first quarter.
Knockout metrics
Its DRAM segment generated $4.2 billion and 71% of total revenue. The average selling price increased by a high level on a quarterly basis. Revenue grew 21% quarter-on-quarter.
NAND revenue rose to $1.6 billion, or 27% of total revenue, and increased quarter-over-quarter. ASPs for NAND increased 30% quarter-over-quarter. The HBM3E is already sold out for the 2024 calendar year and the 2025 supply has already been allocated.
Big increase in driving
Micron posted upward guidance for fiscal third quarter 2024 EPS of 45 cents +/- 7 cents or a range of 38 cents to 52 cents versus consensus estimates of 9 cents. Non-GAAP gross margins are expected to be +/- 1.5% of 26.5%. Expected revenues are between $6.4 billion and $6.8 billion versus consensus estimates of $6 billion.
Micron Technology CEO Sanjay Mehrotra commented, “Our pre-eminent product portfolio positions us well to deliver a strong second half of fiscal 2024. We believe Micron is a major beneficiary in the semiconductor industry of the multi-year opportunity afforded by ‘artificial intelligence”.
Micron Technology analyst ratings and price targets I’m on MarketBeat. You can find the titles of Micron Technology’s competitors and competitors at MarketBeat Stock Screener.
Daily bull flag breakout
The daily candlestick chart for MU illustrates a bull flag breakout pattern at all-time highs in the fiscal Q2 2024 earnings report. The flag formed near the Fibonacci extension at 1.68 on March 8, 2024. MU retreated into a parallel channel until the earnings release, which triggered a gap to $108.78 as shares rose more than 14%.
The daily relative strength index (RSI) rose to the 74 band as stocks attempted to maintain a new base above $100. The pullback support levels are at $101.43, $95.02, $90.04, and $87.94.
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