Micron stock notches best day in more than a year after Evercore analyst says ‘it is game on for memory’
Two underperforming microchip names could be due for a rebound as memory industry trends improve, according to an analyst.
Evercore ISI’s C.J. Muse elevated Micron Technology Inc. MU,
The PHLX Semiconductor Index SOX,
“But sitting here today it is clear that the tides are shifting, with pricing decline expectations into 1HCY22 becoming ‘less bad,’ estimates likely bottoming in 1H22, and green shoots arising from PC constraints elsewhere easing, and hyperscale capex spend likely improving before year end,” Muse wrote. “Thus, we think it is game on for memory.”
Muse noted that Nvidia Corp. NVDA,
Micron shares rose 7.8% in Friday trading and to post their biggest single-day percentage gain since May 27, 2020.
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Muse also thinks that Lam looks well-positioned heading into next year as a “more memory-levered” chip-equipment company. Lam could benefit from growth in NAND capital expenditures, gross-margin improvement and a lessening of supply-chain pressures, in his view.
“From an investor positioning perspective, we note investors are generally eager to get back into memory for anticipated outperformance in 2022 but are not there today,” Muse wrote. “So when the turn comes, we think it will be fast and furious.”
Lam’s stock rose 1.4% Friday, even as shares of peer Applied Materials Inc. AMAT,