When Micron (NASDAQ:MU) reported second-quarter results, the company reminded technology investors on its strength. Despite the COVID-19 pandemic unfolding, Micron posted profits and strong operating cash flow.
In the second quarter, Micron posted revenue of $4.8 billion, down from $5.84 billion last year. Net income was $405 million, or 36 cents a share. DRAM revenue fell 26% from last year but NAND revenue rose 9%. Importantly, gross margin was 29.1%. The strong results suggest that the business momentum will continue. Expectations of a 41 cent EPS and gross margins of 30% are encouraging.
Demand for memory and high-speed storage will not end. Workers may stay at home but still need PC upgrades to work effectively. Corporations need servers with even more memory and high-performance storage. This will sustain Micron’s growth even as other companies report a slowdown.
The downturn in the memory sector ended around two years ago. The industry worked through the excess supply since then, giving more stable and favorable pricing for Micron’s products. Chances are high that the stock is a recession-proof holding. The economy will slow but companies that thrive still need upgrading back-end technology solutions.
Continue to accumulate MU stock on weakness.
