Micron (NASDAQ:MU) is the bellwether for semi-technology stocks. When shares peaked at $60 last June, 2018, analysts were well off the mark upgrading the stock and setting a $90 price target. The stock kept falling and started 2019 at around $30. What happens next to revenue and profits this year?
The trade war took a toll on chip spending in the last quarter. The cyclical peak in smartphone demand is another headwind for memory and NAND pricing.
Technical advances could help revenue
Micron’s 3d XPoint could give a key feature to next-generation smartphones to drives sales. If smartphones use 3D XPoint to replace DRAM, it could save battery life.
Competitor Samsung also warned smartphone sales would disappoint this year. That the stock did not fall by much and Micron held up signals the selling pressure is ending. Markets instead believe management’s assertions for a second-half recovery. By then, new smartphone models could drive component demand higher.
Risks
Apple’s (NASDAQ:AAPL) warning on weaker smartphone sales is bad news for the industry. Smartphone manufacturers are not adding features that consumers need. This will slow the upgrade cycle. 5G and 4G/LTE are not that different and will not encourage upgrades.
Takeaway
The 2H/2019 story is still months away. Micron has attractive valuations but could underperform for a long time.
