Micron’s stock has declined to its 200-day moving average despite reporting robust third-quarter fiscal 2024 results, beating analyst expectations for both earnings per shareEarnings per share (EPS) is a fundamental financial metric that provides valuable insights into a company's profitability. This widely used indicator helps investors and analysts g... and revenue. The company’s High Bandwidth Memory (HBM3E) solution, which uses 30% less power than competitors, has high demand and is sold out for 2024 and 2025. Growth is driven by AI-related demand, with significant increases expected in DRAM and NAND memory due to AI applications. Despite a recent 30% drop from its June 2024 peak, analysts remain optimistic about Micron’s future due to its strong position in the memory chip market and advancements in AI-specific memory solutions. Federal support is boosting domestic production capacity.

Strong Q3 Fiscal 2024 Results

Financial Highlights

Micron reported impressive financial results for its third quarter of fiscal 2024, which ended on May 30, 2024. The company exceeded analysts’ expectations for both earnings per share (EPS) and revenue. This strong performance underscores Micron’s resilience and strategic positioning in the highly competitive memory chip market.

High Bandwidth Memory (HBM3E) Success

A significant driver of Micron’s recent success is its High Bandwidth Memory (HBM3E) solution. The CEO highlighted that this product boasts 30% lower power consumption compared to competitors’ offerings. This energy efficiency has spurred substantial demand, resulting in HBM products being sold out for the calendar years 2024 and 2025. This achievement positions Micron favorably in the market, particularly as the demand for high-performance memory solutions escalates.

Growth Driven by AI Demand

AI’s Impact on Memory Demand

The surge in AI-related applications has been a pivotal factor in Micron’s growth trajectory. The company anticipates significant increases in demand for DRAM and NAND memory, driven by the burgeoning requirements of AI technologies. This includes the training of large AI models and the proliferation of AI in edge devices, which necessitate advanced memory solutions.

Market Position and Future Prospects

Despite a recent 30% decline from its June 18, 2024 peak, analysts remain optimistic about Micron’s future. The company’s strategic focus on AI-specific memory solutions and its strong position in the memory chip market are expected to drive long-term growth. Additionally, Micron’s utilization of federal support to enhance domestic production capacity is anticipated to capture more industry upside in the future.

Current Stock Performance

Market Overview

As of the latest available data, Micron’s stock was trading at $109.41, with a market capitalization of around $121 billion. While the memory chip industry is known for its cyclical nature, leading to potential volatility in stock prices, Micron’s strong growth potential, especially in the AI sector, offers a compelling investment case.

Short-Term and Monthly Stock Predictions

Early August 2024 Forecast

• August 1: $110
• August 2: $111
• August 15: $113

Weekly Predictions for August 2024

• Week 1 (August 5-9): The stock price is expected to fluctuate between $89.73 and $108.02, with closing prices around $97-100.
• Week 2 (August 12-16): Predictions indicate a price range from $87.57 to $106.95, with closing prices around $95-99.
• Week 3 (August 19-23): The stock is forecasted to trade between $86.09 and $106.94, with closing prices around $93-99.
• Week 4 (August 26-27): Price predictions suggest a range of $85.00 to $103.11, with closing prices around $92-95.

Overall August 2024 Forecast

• Average Price: $99.76
• Maximum Price: $113.15
• Minimum Price: $80.75
• End of Month Price: $100.35, representing a -4.2% change from the beginning of the month

Near-Term Prediction

One forecast narrative is that Micron’s stock will find buyers off the 200-day moving average and will bounce by 4.55% to reach $112.34 per share by July 31, 2024.

Prediction Accuracy

Prediction accuracy: Micron Technology (MU) has historically risen by 33.2% on average over 52-week periods, based on 40 years of stock performance. The stock has risen higher in 21 out of those 40 years, corresponding to a historical accuracy of 52.5% for positive predictions.

Earnings estimates: Micron has beaten its earnings per share (EPS) estimates 100% of the time in the past 12 months. This suggests that analyst predictions for Micron’s earnings have tended to be conservative.

Sales estimates: Similarly, Micron has beaten its sales estimates 100% of the time in the past 12 months, again indicating that analyst forecasts for revenue have generally been on the conservative side.

Industry comparison: In the last calendar year, Micron has outperformed its overall industry in both earnings and sales predictions.

Recent Upgrades and Analyst Sentiments

Micron has recently been upgraded to a Zacks Rank #1 (Strong Buy), indicating positive earnings estimate revisions and a strong potential for near-term price increases. This upgrade reflects an optimistic outlook from analysts, suggesting that the stock might perform well in the near future.

Insights

1. Micron’s HBM3E solution offers significant power efficiency advantages.
2. AI demand is a major growth driver for Micron’s memory products.
3. Federal support is enhancing Micron’s domestic production capacity.

The Essence (80/20)

Core Topics:

• Financial Performance: Strong Q3 results, beating earnings and revenue estimates.
• HBM3E Solution: 30% lower power consumption, high demand, sold out for two years.
• AI Demand: Significant growth expected in DRAM and NAND memory due to AI applications.
• Stock Performance: Despite a 30% decline from the June 2024 peak, analysts see strong prospects.
• Federal Support: Boosting domestic production capacity.
• Stock Forecast: Fluctuations expected in August 2024, with an average price around $99.76.

The Guerilla Stock Trading Action Plan

1. Monitor AI Market Trends: Track the growth of AI applications to anticipate further demand for Micron’s products.
2. Evaluate Federal Policies: Stay updated on government support initiatives for domestic chip production.
3. Analyze Competitors: Compare Micron’s HBM3E solution with competitors’ offerings to gauge competitive advantages.
4. Track Stock Movements: Regularly review stock forecasts and adjust investment strategies accordingly.

Blind Spots

The cyclical nature of the memory chip industry can lead to significant volatility in stock prices, potentially impacting long-term investment strategies.

Supply Chain Disruptions

• Detail: Potential supply chain disruptions, such as geopolitical tensions or material shortages, could affect Micron’s production and delivery capabilities, leading to delays and increased costs.
• Impact: These disruptions can impact revenue and profitability, especially if Micron cannot meet the high demand for its products.

Technological Advancements by Competitors

Impact: If competitors develop more advanced or cost-effective memory solutions, Micron may struggle to maintain its position and pricing power in the market.

Detail: Rapid technological advancements by competitors could outpace Micron’s innovations, reducing its market share and competitive edge.

MU Technical Analysis – Daily Chart

Chart Analysis for Micron Technology (MU) in the daily time frame.

Trend Analysis:
The stock experienced a strong upward trend from early February until mid-May, peaking around $160. Since then, it has been in a downward trend, breaking below the 200-day moving average (red line) and approaching the 50-day moving average (blue line). The price currently sits around $109.41.

Support and Resistance Levels:
Support is observed around the 200-day moving average at $102.04. Resistance is near the recent high of $160.

Volume Analysis:
The volume has been relatively high during the recent decline, indicating strong selling pressure.

Relative Strength IndexIn the world of technical analysis, the Relative Strength Index (RSI) stands as a cornerstone tool for traders seeking insights into market momentum. Developed by J. Welles Wilder ... (RSI):
The RSI is at 31.72, which is near the oversold territory, suggesting potential for a short-term bounce.

On Balance VolumeThe On Balance Volume indicator (OBV) is a technical analysis tool used to measure the flow of money into and out of a security over a specified period of time. It is a cumulative ... (OBV):
The OBV is showing a downward trend, indicating selling pressure.

Stochastic RSIIn the realm of technical analysis, the Stochastic RSI (StochRSI) emerges as a powerful tool for traders seeking to navigate market dynamics with precision. Developed by Tushar S. ...:
The Stochastic RSI is at 0.133, suggesting the stock is oversold and may experience a short-term rebound.

Chaikin OscillatorNamed after its creator Marc Chaikin, the Chaikin Oscillator stands as a formidable tool in the arsenal of technical analysts. This oscillator is designed to measure the accumulati...:
The Chaikin Oscillator is at -24.80, indicating strong selling pressure.

MACDThe MACD indicator is essentially a momentum indicator that shows the relationship between two different moving averages of price. The MACD is the difference between the 12-period ... More:
The MACD line is below the signal line with a negative value of -8.94, indicating a bearish trend.

Time-Frame Signals:
3-Month: Sell
6-Month: Hold
12-Month: Buy

MU Technical Analysis – Weekly Chart

What has concerned traders who predict that MU stock in the daily time frame will break below its 200-day moving average is what is occurring on the weekly chart of MU.

In the weekly time frame, the chart for Micron Technology (MU) exhibits several key technical indicators and patterns. The price recently peaked near $140 but has since declined to around $109.41. This drop is accompanied by a noticeable increase in trading volume, indicating potential distribution.

The Relative Strength Index (RSI) stands at 46.92, which suggests the stock is approaching oversold conditions but is not quite there yet. The On-Balance Volume (OBV) has been trending downwards, indicating that selling pressure has been stronger over time. The Stochastic RSI is at 0.000, which is extremely oversold and may indicate a potential rebound.

The Chaikin Oscillator shows a value of -27.47M, suggesting bearish momentum.

The MACD Oscillator, with values of 13.64 (MACD Line), 16.43 (Signal Line), and -2.79 (Histogram), indicates a recent bearish crossover, further confirming the negative sentiment.

Overall, the trend is currently downward, with significant selling pressure and bearish momentum.

Time-Frame Signals
3 Months: Sell
6 Months: Hold
12 Months: Buy

Past performance is not an indication of future results, and this article should not be considered as investment advice. Always conduct your own research and consider consulting with a financial advisor before making any investment decisions. 🧡

Looking Ahead

Micron Technology Inc. continues to navigate the complexities of the memory chip market with notable success. The company’s strong Q3 fiscal 2024 results, driven by its innovative HBM3E solution and rising AI-related demand, underscore its growth potential. While the stock has experienced recent volatility, analysts maintain a positive outlook for Micron, buoyed by its advancements in AI-specific memory solutions and strategic expansion of domestic production capacity. As the company capitalizes on these opportunities, investors can expect continued strong performance in the future.

Micron Technology FAQ