Just in the first ten days of this month, the Philadelphia Semiconductor Index (PHLX Semiconductor Index), which represents chip stocks, experienced seven consecutive gains, surpassing the historical peak of the dot-com bubble in 2000. Among them, the one that rose the most was Micron Technology Inc., whose stock price once exceeded the highest level since September 2000.
David Kostin, chief equity strategist at Goldman Sachs , recommends sticking to growth stocks such as Micron . Nomura analyst Romit Shah even raised the stock's price target for the next 12 months to $100, which means the stock still has 68% room for upside.
However, the star stock explained in its performance report for the second fiscal quarter of fiscal year 2018 released on Thursday that it expected third-quarter results may disappoint some analysts. It is expected that after excluding some costs, earnings per share (EPS) in the third fiscal quarter as of the end of May will be US$2.83, and revenue will be between US$7.2 billion and US$7.6 billion.
Previously, analysts had expected the company's EPS and revenue to be US$2.65 and US$7.29 billion respectively.
Micron Technology CEO Sanjay Mehrotra said in a conference call with analysts that the interruption of nitrogen supply at one of the factories will affect the production of major chip products DRAM by approximately 2%-3% in the third fiscal quarter.
This has triggered concerns in the market that Micron Technology may not be able to maintain the performance growth momentum of the past year-last year, the company's revenue increased by 60% and its stock price doubled. The
financial report also showed that Micron Technology’s second quarter revenue was US$7.351 billion, an increase of 58.1% from US$4.648 billion in the same period last year; net profit was US$3.31 billion, a surge of 270% from US$894 million in the same period last year.
However, Micron Technology CEO Sanjay Mehrotra also said that the company is still confident that the market will remain in short supply. The chip demand outside the main business of personal home computers and its service market will make the market more attractive, and the performance growth of chip markets such as cloud computing will also be more sustainable.
In his view, today's memory market is "definitely different from the past." Operators providing online data services are expanding network infrastructure. They need more memory and the speed of database construction will be accelerated to provide more new Services that can be used for artificial intelligence. In addition, the explosive growth momentum of intelligent automobile driving is creating a vast chip market, which has greatly benefited Micron Technology, the main manufacturer in this field.
Affected by the lower-than-expected performance outlook, the price of Micron technology stock fell 3.52% on Thursday and fell 4.01% to $56.56 after hours. The stock has risen more than 40% this year, approaching its highest level in seventeen years.
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Since the middle and late part of this month, the Philadelphia Semiconductor Index (PHLX Semiconductor Index) has fluctuated downwards. Since the financial crisis, technology stocks have been the strongest performing part of the stock market. Technology stocks, including chip stocks, have gained nearly 33% in the past 12 months.
