Micron Technology, Inc. (NASDAQ:MU) used to be a giant in the DRAM market. But the weakening PC sales have hammered the company’s core business. According to a report, PC sales plummeted by 5.7% in 2016. Micron also makes NAND chips that are used in smartphones, but the growth in this industry isn’t promising either, as analysts fear the smartphone boom around the world is nearing its end. But there is another interesting trend here. DRAM prices started spiking in 2016, amid a supply and demand gap. This trend will continue to grow in 2017.
In the first quarter of 2017, Micron’s Mobile Business Unit (MBU) increased by 54% as compared to a quarter earlier. Analysts think that mobile industry will keep Micron Technology, Inc. (NASDAQ:MU) busy for the near future, but for long term growth, the company will have to shift its focus on to Internet of Things, AI and Augmented Reality. Micron Technology, Inc. (NASDAQ:MU) already has a stable Cloud and servers business. In the coming years, almost every connected device, smart home devices, refrigerators and cars will have NAND and DRAM devices. Micron Technology, Inc. (NASDAQ:MU) being the market leader will benefit from this nicely.
Server farms which are used by AI-based platforms are now shifting to DRAM from hard drives. Behemoths like Facebook and IBM’s Watson use DRAM to load and save their user data because DRAMs are much faster and more efficient that hard drives.
The smart home or Personal Digital Assistants market is another promising domain for Micron Technology, Inc. (NASDAQ:MU). Even though two of the mainstream smart home devices in the US, Amazon Alex and Google Home, don’t use chips made by Micron, the company is set to make chips for connected devices for new market entrants. New companies will soon start making smartphone devices and kits, and they will require cheap but quality chips. The company can also leverage its server farms in this domain.
Last month, Micron Technology, Inc. (NASDAQ:MU) price target was raised to $35 by Citigroup. Renowned investor Jim Cramer recently said that Micron shares should be bought because the company is benefiting from rising chips prices. Last month, Bank of America/Merrill Lynch also upgraded Micron to “Buy” from “Sell”. The stock is currently roaring after Wednesday’s update by Goldman Sachs, which upped its rating for the company to “Buy” from “Neutral”.
Micron Technology, Inc. (NASDAQ:MU) shares have increased by over 47% over the past 6 months. For the second quarter of 2017, Micron expects to earn $0.58-$0.68 and $4.35 billion-$4.7 billion revenue, better than the analysts’ forecast of $0.39 EPS and $3.91 billion revenue.
You have Successfully Subscribed!
Advanced Real-Time Chart: If not automatically loaded with the correct symbol related to this article, you can manually enter it (ex. AAPL) to update the chart.
