Memory Chip Stocks Surge but Face Potential Decline
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 days ago
0mins
Should l Buy MU?
Source: CNBC
- Memory ETF Surge: The Roundhill Memory ETF (DRAM) surged nearly 30% this week, reflecting strong performance in memory chip and data storage stocks driven by AI trades, despite modest overall market gains.
- Outstanding Individual Stocks: Qualcomm rose over 23% this week, while Micron soared nearly 37%, marking its best weekly performance since 2008; however, both stocks have relative strength indices (RSI) exceeding 80, indicating potential pullback risks.
- Overbought and Oversold Dynamics: Qualcomm's RSI stands at 86, with a consensus hold rating among analysts, predicting a 22% drop to reach the price target, while Micron's RSI is at 82, rated buy by most analysts, yet still has a 23% downside potential.
- EPAM and Zoetis Under Pressure: EPAM Systems has an RSI of 18 after falling over 11% due to a revenue growth outlook cut, while Zoetis dropped more than 27% after missing first-quarter earnings expectations, with an RSI close to 15, indicating strong oversold signals.
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Analyst Views on MU
Wall Street analysts forecast MU stock price to fall
26 Analyst Rating
24 Buy
2 Hold
0 Sell
Strong Buy
Current: 746.810
Low
235.00
Averages
336.12
High
500.00
Current: 746.810
Low
235.00
Averages
336.12
High
500.00
About MU
Micron Technology, Inc. provides memory and storage solutions. The Company delivers a portfolio of high-performance dynamic random-access memory (DRAM), NAND, and NOR memory and storage products through its Micron and Crucial brands. The Company's products enable advancing in artificial intelligence (AI) and compute-intensive applications. Its segments include Cloud Memory Business Unit (CMBU), Core Data Center Business Unit (CDBU), Mobile and Client Business Unit (MCBU) and Automotive and Embedded Business Unit (AEBU). CMBU is focused on memory solutions for large hyperscale cloud customers, and high bandwidth memory (HBM) for all data center customers. CDBU is focused on memory solutions for mid-tier cloud, enterprise, and OEM data center customers and storage solutions for all data center customers. MCBU is focused on memory and storage solutions for mobile and client segments. AEBU is focused on memory and storage solutions for the automotive, industrial, and consumer segments.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
DRAM ETF Reaches $6.5 Billion in 36 Days, Fastest Ever
- Rapid Asset Growth: The Micron-led Roundhill Memory ETF (DRAM) reached $6.5 billion in assets in just 36 days, making it the fastest ETF to achieve this milestone, surpassing BlackRock and Fidelity's Bitcoin ETFs, highlighting the intense interest in AI memory trades on Wall Street.
- Significant Inflows: Following a 13% surge last Friday, DRAM attracted another $1 billion in inflows, indicating a growing investor focus on the memory supply chain, particularly in the context of rapid advancements in AI technology.
- Concentration of Holdings: Micron constitutes 27% of the DRAM fund, slightly edging out SK Hynix and Samsung Electronics, reflecting a concentrated investment strategy in the memory sector, with investors viewing memory as a critical component of AI development.
- Market Risk Advisory: While D.A. Davidson analysts reiterated a Buy rating on Micron with a $1,000 price target, they also cautioned about the cyclical nature of the memory industry, particularly the risk of oversupply and price declines as Micron expands its capacity.
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- Rapid Asset Growth: The Micron-led Roundhill Memory ETF (DRAM) reached $6.5 billion in assets in just 36 days, making it the fastest ETF to achieve this milestone, surpassing BlackRock and Fidelity's Bitcoin ETFs, highlighting the intense interest in AI memory trades on Wall Street.
- Significant Inflows: Following a 13% surge last Friday, DRAM attracted another $1 billion in inflows, indicating a growing investor focus on the memory supply chain, particularly in the context of rapid advancements in AI technology.
- Concentration of Holdings: Micron constitutes 27% of the DRAM fund, slightly edging out SK Hynix and Samsung Electronics, reflecting a concentrated investment strategy in the memory sector, with investors viewing memory as a critical component of AI development.
- Market Risk Advisory: While D.A. Davidson analysts reiterated a Buy rating on Micron with a $1,000 price target, they also cautioned about the cyclical nature of the memory industry, particularly the risk of oversupply and price declines as Micron expands its capacity.
See More
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- Market Performance: The S&P 500 Index rose by 0.25% and the Nasdaq 100 Index increased by 0.17%, reaching all-time highs, reflecting strong corporate earnings and optimism around artificial intelligence, although rising oil prices and bond yields limited gains.
- Middle East Impact: The failure of the US and Iran to reach a peace agreement has led to rising global bond yields, with the 10-year T-note yield increasing by 3 basis points to 4.39%, raising concerns that elevated energy prices could force central banks to tighten monetary policy.
- Chinese Trade Data: China's April exports rose by 14.1% year-on-year and imports increased by 25.3%, both exceeding market expectations, indicating positive signals for global economic recovery that could benefit global markets.
- Earnings Reports: So far, 83% of the 446 S&P 500 companies that reported earnings have beaten estimates, with Q1 earnings projected to climb by 12% year-on-year, although excluding the technology sector, the growth is only 3%, marking the weakest performance in two years.
See More
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- Corning Stock Surge: Corning's shares jumped 10% after Nvidia announced a $3.2 billion investment and a partnership to open three new manufacturing plants, leading to its inclusion in Bank of America's U.S. 1 List, reflecting strong market confidence in its growth prospects.
- Wendy's Rating Cut: JPMorgan downgraded Wendy's from neutral to underweight with a new price target of $6, implying an 18% downside, primarily due to a continued decline in U.S. same-store sales trends and uncertainty about the company's future, resulting in a 6% drop in stock price.
- Circle Internet Group Mixed Results: Circle's stock rose 15% after reporting earnings per share of 21 cents, beating expectations, although its revenue of $694 million fell short of the $722 million forecast, while successfully raising $222 million from various institutions, indicating market confidence in its stablecoin.
See More
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- Executive Delegation: President-elect Trump has invited top executives, including Tesla's Elon Musk and Apple's Tim Cook, to join his trip to China, aiming to enhance U.S.-China business cooperation through high-level engagement.
- Broad Agenda: The summit is expected to cover a wide range of topics, including trade, artificial intelligence, export controls, Taiwan, and the Iran war, indicating a desire to ease tensions through dialogue after recent escalations.
- Business Deal Expectations: Trump hopes to secure a series of business deals and purchase agreements during the visit, which, if successful, could enhance U.S. companies' competitiveness in the Chinese market and foster bilateral economic relations.
- Diverse Executive List: The delegation includes executives from various sectors, such as Stephen Schwarzman of Blackstone and Jane Fraser of Citigroup, reflecting U.S. companies' commitment to the Chinese market and willingness to collaborate.
See More
Narrow Market Breadth Raises Investor Concerns
- Uneven Market Performance: The S&P 500 reached an all-time high above 7,400 on Monday, climbing over 17% since March 30's low of 6,316.91, yet technical analysts express concern over the lack of participation from non-tech stocks.
- Tech Dominance: While tech stocks, particularly Micron Technology, have surged with a 140% increase, only 52% of S&P 500 components are above their 50-day moving average, significantly lower than the historical average of 86%.
- Contradiction of New Highs and Lows: Friday marked only the third instance since 1990 where the S&P 500 reached a new high while simultaneously recording more new lows, a pattern previously seen in December 1999, indicating potential market fragility.
- Poor Economic Signals: Despite the potential for large tech companies to drive further market gains, analysts warn that five sectors are trading below their 200-day moving averages, reflecting underlying economic weakness and declining consumer confidence.
See More
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- Semiconductor Surge: Stocks related to AI, including Micron, Intel, AMD, Qualcomm, and Nvidia, are driving market optimism as they rise sharply, indicating renewed investor confidence in technology stocks.
- Corning's Stock Surge: Corning's shares have jumped over 9% due to soaring demand for fiber optic cables and infrastructure materials, and a partnership with Nvidia further solidifies its position in the data center market, although Jim Cramer is contemplating trimming his holdings.
- Honeywell's Quantum IPO: Honeywell filed a Form S-1 for its quantum computing subsidiary, Quantinuum, which, despite being loss-making, could unlock additional investor value and simplify Honeywell's business narrative as it approaches a breakup.
- Qnity Electronics Gains: Qnity Electronics stock rose 4.5% ahead of its earnings report, boasting an impressive 89% year-to-date increase, reflecting its critical role as a supplier in the semiconductor and electronics sectors, with Jim Cramer highlighting it as a valuable asset worth holding.
See More
