Memory-chip maker Micron Technology (MU) has benefited from strong demand for its products. But with a recent pullback in Micron stock, some investors might be wondering: Is MU stock a buy right now?
The memory-chip market hit the skids in the second half of 2018 when sales of smartphones, personal computers, servers and other gear slowed. But memory-chip sales rebounded in late 2020. Now, some industry analysts are concerned that the current uptrend in the chip cycle is peaking.
Boise, Idaho-based Micron makes two main types of memory chips: DRAM and Nand. DRAM chips act as the main memory in PCs, servers and other devices, working closely with central processing units. Nand flash provides longer-term data storage.
Dynamic random-access memory, or DRAM, accounted for 73% of Micron’s revenue in its fiscal second quarter. Nand flash memory accounted for 25% of its revenue during the period.
In DRAM chips, MU stock competes with South Korea’s Samsung Electronics and SK Hynix. In Nand flash chips, Micron competes with Samsung, SK Hynix, Kioxia and Western Digital (WDC).
MU Stock Fundamental Analysis
Late on March 29, Micron easily beat Wall Street’s targets for its fiscal second quarter and guided higher for the current period. But MU stock seesawed during the next trading session, ending the day down 3.5%.
Micron earned an adjusted $2.14 a share on sales of $7.79 billion in the quarter ended March 3. Analysts expected Micron earnings of $1.98 a share on sales of $7.53 billion, according to FactSet. On a year-over-year basis, Micron earnings soared 118% while sales climbed 25%.
It was the company’s fifth straight quarter of triple-digit percentage gains in earnings per share.
For the current quarter, Micron predicted adjusted earnings of $2.46 a share on sales of $8.7 billion. That would translate to year-over-year growth of 31% in earnings and 17% in sales. Wall Street had projected earnings of $2.24 a share on sales of $8.13 billion.
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