Stock Market » Micron Earnings Overview and MU Share Analysis

Micron Earnings Overview and MU Stock Analysis

Micron Technology Inc. (NASDAQ:MU) is expected to continue to grow at an impressive pace and there is still significant upside potential in the stock market for MU stock if the broader supply chain issues in the market ease. This year.

When will Micron release its second quarter results?

Memory chip maker Micron Technology Inc. is expected to report second-quarter results on Tuesday, March 29.

Overview of Micron T2 Results

Wall Street expects Micron to post a 21% increase in revenue to $7.55 billion from the $6.23 billion delivered the previous year, with adjusted EPS more than doubling year on year. the other at $1.98 against $0.98. Both estimates are just above the middle of the guidance range provided by the company.

Growth is driven by the release of its latest DRAM and NAND technologies and new products for the data center, mobile, graphics and automotive industries, as the adoption of new technologies ranging from 5G and artificial intelligence to electric vehicles continues to fuel demand for its chips.

DRAM chips are primarily used for temporary storage on computers, servers, and mobile devices, while NAND chips provide permanent storage. DRAM sales are expected to increase more than 23% year-over-year in the quarter to $5.49 billion, while NAND sales are expected to increase more than 15% to $1.91 billion.

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The global chip shortage has caused a wave of disruption across all sorts of tech-intensive industries, but the story was different for memory chips made by Micron. They are one of many essential pieces of hardware, alongside other forms of chips such as graphics processing units (GPUs) that provide visual displays and microprocessors that act as the central hub for controlling computer functions. ‘a device. These are the types of chips that companies are looking for, as a combination of increased demand for technology and limited supplies thanks to the Covid disruption is causing a crisis. However, when companies that make computers, smartphones and other devices saw a shortage on the horizon, they decided to hoard memory chips as a precaution.

With that in mind, many manufacturers have ended up with lots of memory chips, but not enough of the other components they need to build devices. This means that demand depends in part on developments in the shortage of other chips and components. However, these stocks are unwinding and Micron said last quarter that it expects memory chip demand to be in line with industry demand in the 2022 calendar, with shipments expected to resume. in the second half as broader supply issues ease.

Micron said its newest chips are achieving “excellent yields,” which helped Micron improve its adjusted gross margin significantly to 47% last quarter from just 33% two years earlier. That should drop to 46% in the second. Notably, consensus numbers suggest that Micron could post a margin above the 50% threshold by the end of the current fiscal year depending on the level of PC demand and whether prices can remain resilient. Micron’s new chips mean the company is “several quarters ahead of the industry”, which should give it a price advantage, at least in the short term.

The outlook for the third quarter will be key in deciding the market’s reaction to the results. Analysts expect Micron to post 10.5% year-over-year growth to $8.2 billion and an 18.6% increase in adjusted EPS to $2.23. Micron has previously said it is on track to deliver record revenues and strong earnings this fiscal year and Wall Street currently estimates the company is on track to generate 18% revenue growth and increase its profits by more than 51% in the 12 months to the start of June.

Notably, Micron is looking for a new chief financial officer after rival Intel poached David Zinsner in January.

Will the CHIPS Act provide a new stock market catalyst for semiconductor stocks?

A potential in-market catalyst to watch for US semiconductor stocks is the CHIPS bill that is currently being debated. The bill proposes to provide $52 billion in subsidies to industry to encourage them to build more factories in the United States as the country seeks to intensify competition with China. He is currently bogged down by disagreements over other provisions of the bill that also seek to make the United States more competitive.

This could be a key stock market catalyst for the industry and give it the clarity and financial backing needed to make significant investments in the United States. For example, Intel has already committed to spending about $20 billion on two new factories in Ohio, but said that could be expanded to eight factories worth $100 billion if the CHIPS law is passed. approved, and Micron is also waiting to find out what happens before deciding. how much of its $150 billion in global investment over the next decade is expected to flow to the United States.

What’s next on the stock market for MU shares?

Micron shares have proven to be highly volatile on the stock market over the past 16 months, trading in a wide channel between a low of $66 and a high of $97.

The MU stock last closed at $75.65 and unsuccessfully tested the 200-day moving average SMA at $79.50 over the past week. This is the first upside target it needs to cross to build confidence of an upward move, towards the 50 and 100 day moving averages converging around the $84.50 mark. Beyond there, the $96.50 channel ceiling kicks in before it can consider climbing to new all-time highs.

On the downside, we could see stocks fall back to the 2022 low of $68 if the stock continues to decline in the stock market as it has for the past few days, but the 2021 low of $66 is a more important bottom. which must hold to avoid opening the door to less than $60.

Micron Technology Inc. (NASDAQ:MU) Daily Chart

Source: TradingView, StoneX

We will likely see the stock continue to drift within the existing channel that has contained it since December 2020. The stock has failed to break out of the channel despite rising trading volumes over the past 100 days, confirming the view that the current pattern will continue.

The RSI remains in bearish territory to suggest that it may remain under some near-term pressure after sliding more than 3% in the past five trading sessions.

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