Markets are hesitant in bidding Micron Technology (MU) stock higher despite the company reporting solid quarterly earnings. Even though the company trounced earnings estimates and raised its guidance, the stock is not re-visiting old highs quickly. Skepticism over the semi-conductor super cycle, along with potential threats from competitors, are slowing the rebound in Micron stock. That fear is overdone.
DRAMeXchange narrowed its forecast for DRAM increase from 5 percent to 3 percent, from last quarter, sequentially. The forecast is based on Samsung meeting with Chinese authorities over the role Samsung plays in rising memory prices. Samsung is the biggest player in the DRAM and NAND market. It has around 46 percent and 37 percent, respectively, of global revenue in those markets. The site fails to recognize the accelerating demand for both components. Smartphone demand may have slowed but it is still growing. The memory and storage per unit increased year-over-year and will continue to drive demand, keeping supply tight and prices high.
Valuation
MU is perhaps the least expensive stock in the technology market and in the semiconductor space. Fundamentals support a higher valuation, given that management expects strong growth in the next quarter. DRAMeXchange looked only at mobile DRAM while demand for desktop, laptop, and server memory are still very strong.
