2. Micron Technology, Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 83
Micron Technology, Inc. (NASDAQ:MU) is another American firm that targets a segment of the global semiconductor market that is generally referred to as the memory sector. This sector deals with products that aid computational chips in their processing. The company’s products cover several markets such as those for personal computing, data center, networking, and smartphones.
As its first fiscal quarter came to an end, Micron Technology, Inc. (NASDAQ:MU) had earned $7.69 billion in revenue and $2.16 in non-GAAP EPS, beating analyst estimates for both. Wedbush set a $120 price target, up from the previous $100, for the company in February 2022, outlining that operational advantages provide strengths to the company over its peers. 83 of the 924 hedge funds surveyed by Insider Monkey in Q4 2021 had owned a stake in the company.
Paul Marshall And Ian Wace’s Marshall Wace LLP is Micron Technology, Inc. (NASDAQ:MU)’s largest investor. It has a stake of $507 million through owning 5.4 million shares.
Hazelton Capital Partners mentioned Micron Technology, Inc. (NASDAQ:MU) in its Q3 2021 investor letter, believing that:
“It’s hard to explain how shares of Micron Technology, manufacture of DRAM and NAND semiconductor chips, can fall during a global chip shortage. In most industries, focusing on demand can give you a clear insight into what lays ahead for a company. Today, the memory and storage chip industry is no different. However, in the past, companies focused on market share led to the reckless build out of chip fabrication plants (FABs), oversupply, falling average selling prices (ASPs) of memory and storage chips, lower margins, and declining cash flows. As the industry consolidated – there are now just 3 major producers of DRAM and 5 on the NAND side – rational behavior among the key players began to take hold as competitors began focusing more on R&D. Currently, chip pricing remains cyclical although less so than in the past and that cyclicality has a long-term upward bias. The ongoing transition to newer and more robust platforms (3D 176-layer NAND & 1-Alpha node DRAM) has provided the memory and storage chip industry with improved supply capacity under its current manufacturing footprint, ultimately pressuring ASPs. Over the past three years, as most of the large platform conversions have already taken place, being able to add more bits per wafer has reached a saturation point. With no major FAB build outs planned in the near-term by competitors Samsung or SK Hynix, constrained supply and flattening cost curves should lead to durable and upward sloping ASPs once the recent volatility from the chip shortage subsides.
Currently Micron Technology trades at just 8x 2022 estimate earnings. MU is expecting growth in both DRAM and NAND not just from the supply of more chips to data centers, artificial intelligence, the auto sector, and mobile devices, but also from greater demand for gigabyte capacity per unit within those segments. With a healthy balance sheet, improving return on invested capital, and expanding cash flows, not only should Micron benefit from improving future earnings but its multiple should also reflect the transition to a flattening cost curve.”
