US Semiconductor Stocks Hit New Highs
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 11 hours ago
0mins
Should l Buy MU?
Source: stocktwits
- Micron's Surge: Micron Technology (MU) stock hit $818.67 on Monday, extending a six-week gain, reflecting strong investor confidence in AI-driven memory demand creating a semiconductor 'supercycle,' with a staggering 761% increase over the past 12 months.
- Intel's Optimism: Intel Corp. (INTC) shares reached $132.75 on Monday, buoyed by reports of a preliminary agreement with Apple to manufacture chips, marking a breakthrough in Intel's foundry ambitions, with a 480% rise in stock price over the last year.
- Everspin's Strong Performance: Everspin Technologies (MRAM) soared to $44.67 on Monday, driven by a strong Q1 earnings beat and a $40 million U.S. defense contract, with a remarkable 553% increase in stock price over the past year, showcasing the company's potential in the semiconductor sector.
- Market Sentiment Soars: Retail sentiment for all three companies on Stocktwits is in 'extremely bullish' territory, indicating that investor optimism surrounding memory chips and data center demand is driving a broader rally across the semiconductor industry.
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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: 795.330
Low
235.00
Averages
336.12
High
500.00
Current: 795.330
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.
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- 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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- Increased Market Competition: Micron faces not only pressure from competitors trying to capture market share with lower prices due to high profit margins but also the risk of governments seeking to tax its profits, further squeezing its margins.
- Policy Risk Emergence: Although the proposal is not yet official policy, it highlights the potential global risk of taxing AI companies, with investors worried that similar policies could emerge in other countries where Micron operates.
- Investor Sentiment Deterioration: Despite Micron not having manufacturing facilities in Korea, investor concerns persist, especially with the possibility of similar tax proposals arising in markets like China and the U.S., which could impact the company's future profitability.
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- Margin Expansion: Memory manufacturers are enhancing pricing power due to soaring demand, with projections indicating profit margins exceeding 70% by 2026, which will significantly boost the profitability of related companies, especially amid the increasing demand for AI workloads.
- Concentration of ETF Assets: The three largest holdings in the DRAM ETF—Samsung Electronics, SK Hynix, and Micron Technology—account for 75% of the ETF's assets, collectively capturing 95% of all DRAM revenues and 67% of NAND revenues, highlighting the market's high concentration.
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- CPI Inflation Rise: The Consumer Price Index (CPI) inflation has picked up, indicating heightened price pressures during the economic recovery, which may prompt the Federal Reserve to adopt a more hawkish monetary policy stance.
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- Semiconductor Sector Overbought: The Philadelphia Semiconductor Index's overbought condition mirrors only two previous instances in 2000 and 1995, indicating significant adjustment risks ahead, particularly against the backdrop of soaring tech valuations.
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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
South Korea Proposes Tax on AI Firms, Impacting Micron
- Government Tax Concerns: South Korea's chief of staff, Kim Yong-beom, proposed a special tax on AI companies via Facebook to fund a 'national dividend,' raising concerns about Micron Technology's future profitability and causing its stock to drop by 3.8%.
- Increased Market Competition: Micron faces not only pressure from competitors trying to capture market share with lower prices due to high profit margins but also the risk of governments seeking to tax its profits, further squeezing its margins.
- Policy Risk Emergence: Although the proposal is not yet official policy, it highlights the potential global risk of taxing AI companies, with investors worried that similar policies could emerge in other countries where Micron operates.
- Investor Sentiment Deterioration: Despite Micron not having manufacturing facilities in Korea, investor concerns persist, especially with the possibility of similar tax proposals arising in markets like China and the U.S., which could impact the company's future profitability.
See More
Memory Chip ETF DRAM Leads Semiconductor Boom
- Retail Investment Surge: The DRAM ETF has seen retail purchases exceed $200 million daily in less than four weeks, surpassing the dollar-volume pace of Tesla-leveraged ETF TSLL and Bitcoin ETF BITO, indicating a strong bullish sentiment among retail investors towards memory and AI infrastructure, with expectations of this buying frenzy continuing.
- Margin Expansion: Memory manufacturers are enhancing pricing power due to soaring demand, with projections indicating profit margins exceeding 70% by 2026, which will significantly boost the profitability of related companies, especially amid the increasing demand for AI workloads.
- Concentration of ETF Assets: The three largest holdings in the DRAM ETF—Samsung Electronics, SK Hynix, and Micron Technology—account for 75% of the ETF's assets, collectively capturing 95% of all DRAM revenues and 67% of NAND revenues, highlighting the market's high concentration.
- Rising CPU Demand: The commercialization of
See More
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- Acquisition Proposal Rejected: eBay has officially rejected GameStop's unsolicited $56 billion acquisition bid, labeling it as 'neither credible nor attractive,' with concerns over a significant funding gap and high debt load, which could undermine GameStop's market confidence.
- Financing Challenges Emerge: Despite CEO Ryan Cohen's commitment to provide $20 billion in financing, analysts warn that GameStop's $10 billion market cap makes acquiring a $48 billion giant nearly impossible without extreme equity dilution, highlighting the fragility of its financing capabilities.
- Market Reaction Tepid: Following eBay's rejection, GameStop's stock fell 2.37% in pre-market trading, indicating investor concerns about its acquisition ability, which may impact its future stock performance and market positioning.
- Unclear Strategic Direction: eBay's board reiterated its focus on luxury goods and trading cards, believing this will yield superior shareholder returns, while GameStop's acquisition intentions could distract from its core resources and strategic focus.
See More
Tech Futures Decline as Oil Prices Exceed $100
- Oil Price Surge: Oil prices have surpassed the $100 mark, intensifying concerns over rising inflation, which has led to a widespread decline in tech futures and shaken investor confidence.
- South Korea News Impact: News from South Korea has triggered losses in Q1 stocks, exacerbating worries about the economic outlook in the region and increasing risk-averse sentiment among investors.
- CPI Inflation Rise: The Consumer Price Index (CPI) inflation has picked up, indicating heightened price pressures during the economic recovery, which may prompt the Federal Reserve to adopt a more hawkish monetary policy stance.
- Market Reaction: The decline in tech futures reflects investor uncertainty regarding future economic growth, particularly under the dual pressures of rising oil prices and inflation, which could lead to increased market volatility.
See More
Wall Street's Growing Divide on Tech Stocks
- Diverging Market Sentiment: Wall Street is sharply divided on tech stocks, with bears arguing that the market is overheating akin to 1999, while bulls see it as a buying opportunity, highlighting a profound disagreement on future market direction.
- Semiconductor Sector Overbought: The Philadelphia Semiconductor Index's overbought condition mirrors only two previous instances in 2000 and 1995, indicating significant adjustment risks ahead, particularly against the backdrop of soaring tech valuations.
- S&P 500 Performance Analysis: Despite the S&P 500 reaching new highs recently, over 60% of its stocks remain below their 50-day and 200-day moving averages, a phenomenon historically associated with market tops, suggesting potential bubble risks in the current environment.
- Investor Caution Signals: Notable investor Michael Burry warns of clear bubble signs in the current market, advising caution towards stocks that have surged dramatically, reflecting concerns about future market trajectories.
See More
