5 Stocks That Benefit from Global Chip Shortage

1. Micron Technology (NASDAQ: MU)

Number of Hedge Fund Holders: 87     

Micron Technology (NASDAQ: MU) is ranked first on our list of 10 stocks that benefit from global chip shortage. The company makes and sells memory and storage products and operates from Idaho. 

On July 1, investment advisory KeyBanc maintained an Overweight rating on Micron Technology (NASDAQ: MU) stock and raised the price target to $120 from $115, noting that the firm had posted strong results and guidance in the second quarter. 

At the end of the second quarter of 2021, 87 hedge funds in the database of Insider Monkey held stakes worth $6.3 billion in Micron Technology (NASDAQ: MU), down from 100 in the preceding quarter worth $7.6 billion.

In its Q1 2021 investor letter, Bonsai Partners, an asset management firm, highlighted a few stocks and Micron Technology (NASDAQ: MU) was one of them. Here is what the fund said:

“Micron is a manufacturer of memory semiconductor chips. Micron appreciated 17.3% during the quarter.

With the semiconductor cycle in full swing, sentiment continued to improve for major DRAM and NAND suppliers. Spot pricing for DRAM continues its upward march due to supply shocks across the industry and sustained demand levels that continue to outstrip supply.

As a result, Micron showed improving results for the fiscal first quarter, raised guidance intra-quarter for the fiscal second quarter, and offered strong guidance for the fiscal third quarter in both growth and margins.

While the cyclical nature of DRAM hasn’t changed, the cycles themselves continue to become more benign, leading to long-term economic improvement across these businesses. Micron is now continuously profitable, with industry players in a dramatically stronger position than even just five years ago.

The biggest negative surprise in the quarter came from Micron’s exit from its 3D XPoint hybrid memory business. The company also announced its decision to sell its accompanying Utah fab. Fortunately, this development does not alter the investment thesis much since 3D XPoint was an option ticket for future growth. While it’s unfortunate this product didn’t pan out, now is an excellent time to sell a fab, so perhaps it is a blessing in disguise?”

You can also take a peek at 10 Earnings Reports Investors Must Read and 10 Best Nickel Stocks to Buy Now.

Follow Insider Monkey on Twitter