Micron Technology Stock Surges 15% on Strong Revenue Outlook - Nvidia Supplier Boosts Market Cap by $15 Billion
Micron Technology (NASDAQ:MU) experienced a significant surge in its stock price, rising nearly 15% after releasing an optimistic first-quarter revenue outlook. The company highlighted the strong demand and pricing for high-bandwidth memory chips (HBM), which are crucial for the fast-growing generative AI sector. As a key supplier to AI giant Nvidia (NASDAQ:NVDA), Micron's market capitalization increased by approximately $15 billion in just one day, with the stock surging around 27% in the past three weeks.
In its fourth-quarter results, ending on August 29, Micron reported its strongest quarterly revenue growth in a decade, surpassing Wall Street's expectations. Analysts at Mizuho commented on the positive outlook, stating that it's not a good day to bet against memory and semiconductor equipment stocks. They advised against shorting these stocks and recommended considering investments in key semiconductor winners, even if investors are not fans of Micron.
Mizuho also highlighted the uncertainty surrounding Samsung Electronics Co Ltd's (KS:005930) strategy for conventional DRAM capacity and bit growth in the memory market through 2025. While Samsung is a competitor to Micron in the AI memory chip sector, Mizuho believes that Micron's focus on higher-margin products like HBM servers and data center chips will help mitigate potential aggressive moves by Samsung.
Additionally, the U.S. government's expected addition of China's leading DRAM manufacturer, ChangXin Memory, to the entity list could reduce the risk of oversupply in the DRAM market. This move would prevent China from flooding the market with cheap DRAM, ultimately benefiting companies like Micron.
In conclusion, Micron's strong performance and positive outlook indicate a potential for sustained growth in the near term. Investors should consider the company's focus on high-margin products and the potential impact of geopolitical decisions on the semiconductor market when making investment decisions.