MU - Micron: Gnashing Of Teeth As The Best Upcycle Develops (Rating Downgrade)
2024-04-05 10:00:00 ET
Summary
- The upcycle continues, but don't forget where we came from, with bits shipped bottoming in December 2022.
- Many have wrung hands over Micron Technology, Inc.'s HBM market share or technological position over the last few quarters, but they don't matter to the share price.
- I review the key points of this upcycle and explain there's much more to go in terms of upside for fundamentals and earnings.
- But Micron Technology stock and valuation - now only after earnings - have come to a point where it's time to wait and hold, not buy.
In this memory upcycle, I've been more accurate in locating the fundamental turns than at any other time in my analysis career. After pointing out the exact industry and share bottom in December of 2022 when Micron Technology, Inc. ( MU ) said bits shipped had bottomed, many of my subscribers (and maybe even some of my followers) entered into large common share or long-dated call ((LEAP)) long positions to capitalize on the forthcoming upcycle. Then, several months ago, when I heard management's plan for CapEx and fab equipment, I predicted this would be the best upcycle in history in terms of producers' benefit. Now, after a stellar FQ2 earnings report and a 150% return on my 2022 call, it's time to reassess once again where we are in the fundamental and financial cycle and determine the risk-reward of the share price.
A Brief History Of How We Arrived Here
The last year-and-a-half has been an interesting ride for the Micron crowd. In the weeks and months following my December 2022 article, many disagreed with me, saying there was much more to go in the cyclical trough, while others said earnings were still bottoming and there'd be better entries to come in 2023. But those who don't understand how Micron's industry and cycles work weren't going to be convinced the financials don't necessarily matter when finding the bottom (or the top, for that matter)....
Micron: Gnashing Of Teeth As The Best Upcycle Develops (Rating Downgrade)