Micron Presents Opportunity Driven by AI, But Be Careful
$Micron Technology(MU.US$ offers potential driven by AI, but caution is advised. Here’s a breakdown:
Stock Performance and Analysis
The stock gapped up after the last earnings release, but earnings are always uncertain.
The chart shows a gap up after earnings release last quarter. Bulls are expecting a similar gap up this time. However, prudent investors know that earnings is a risk event and the results can go either way. Consider starting with Arora Second Law of Investing and Trading, which states, “Nobody knows with certainty what is going to happen in the markets.” Consider following with Arora’s Third Law, which states, “Making investing and trading decisions based on probabilities is the only realistic and profitable approach.”
The chart shows that in June, MU stock accelerated away from the trendline.
June saw MU stock move away from the trendline, with a bearish engulfing candle forming last week, indicating a negative pattern.
Stock Performance and Analysis
The stock gapped up after the last earnings release, but earnings are always uncertain.
The chart shows a gap up after earnings release last quarter. Bulls are expecting a similar gap up this time. However, prudent investors know that earnings is a risk event and the results can go either way. Consider starting with Arora Second Law of Investing and Trading, which states, “Nobody knows with certainty what is going to happen in the markets.” Consider following with Arora’s Third Law, which states, “Making investing and trading decisions based on probabilities is the only realistic and profitable approach.”
The chart shows that in June, MU stock accelerated away from the trendline.
June saw MU stock move away from the trendline, with a bearish engulfing candle forming last week, indicating a negative pattern.
Pricing
High bandwidth memory prices are exceptionally high due to strong demand, and traditional D-RAM and NAND prices are also rising, benefiting Micron in the short term.
High bandwidth memory prices are exceptionally high due to strong demand, and traditional D-RAM and NAND prices are also rising, benefiting Micron in the short term.
Earnings
Consensus estimates: $0.48 earnings, $6.6B revenue.
Whisper numbers: $0.55 earnings, $7B revenue.
Stocks move based on the difference between reported and whisper numbers. Historically, Micron’s CEO is bullish.
Valuation
MU trades at a trailing PE of about 10, compared to NVDA's 74.
Less informed investors might see MU as cheap relative to NVDA, but MU’s status as a commodity stock justifies its lower PE.
Micron’s potential peak earnings could be $20 per share, but peaks are typically followed by busts.
Probabilities Post-Earnings
55% probability of a strong move up
30% probability of a strong move down
15% probability of staying range-bound
Investment Strategy
Use buy zones, target zones, and disciplined quantities to maximize risk-adjusted returns.
Consider a trade around position to enhance profits and reduce risks.
What to Do Now
Current MU stockholders may continue holding.
Aggressive investors could focus on a trade around position.
Non-aggressive investors might wait for a dip to enter the buy zone.
*For reference only.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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