Micron Earnings

The Six Five team discusses Micron Earnings.

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Transcript:

Daniel Newman: Micron starts off another earning season with a decent result. But as Charles Barkley would say, the guidance was terrible.

Patrick Moorhead: Yeah, it was pretty bad. I don’t know if you’re going to lead this one, but essentially I was completely expecting this. There were no surprises. And I think Wall Street expected it too, because there was almost no movement in after hours on this. And listen, if you’ve been following semiconductors as long as we have, I’ve been following over 30 years, memory and storage are boom and bust markets. I wouldn’t say we’re going to a bust market, and I’m worried that Micron is overreacting by reducing its CapEx so much, because there will be a boom that will come back, and if we do a quick V-shaped curve out of this, Micron might be cutting off its future supply.

The one thing that makes me feel really good though about Micron is that it’s industry leading in what it does. In memory, it is the leader in DDR five, and all server and all PC designs are going to DDR five. They are, by definition, the number one market share leader in automotive as well. And then on storage, they have the highest density or megabit per bit out there, and highest density storage out there in the market. Those are some things, when in comparison, if you look at maybe a Samsung or a Hynix or somebody like that, while the market might be down Micron’s future, I think, looks bright.

Daniel Newman: Yeah, good hit Pat. Wall Street didn’t expect quite what happened, but I think there’s been so much selling that nobody was super surprised. I think they had a 60 ish cent forecast from Wall Street and they came out with four cents earnings this next quarter. So it was definitely down.

Patrick Moorhead: I wonder why it didn’t move though. Right?

Daniel Newman: Well, it’s already so far down. I think, to some extent it’s-

Patrick Moorhead: That’s what I mean, it was built in.

Daniel Newman: Yeah.

Patrick Moorhead: People knew it.

Daniel Newman: Bad news for a while now. I think a little bit of good news, we’ll see a lot of upside in the near future. I think semis have booms and busts. I think we are definitely in a bit of a holding pattern right now.

Patrick Moorhead: By the way, Micron’s up 3% this morning.

Daniel Newman: Well, the whole market’s up today. This is why-

Patrick Moorhead: It is. But when I look at the other semis, I mean NVIDIA’s up 3%.

Daniel Newman: Yeah, the whole market, the whole semi market’s up today. This is all related to retracting yields on the bonds and some PCA e-data that came out today. We’re not even trading on individual company performance anymore. The whole markets moving based upon the fed, inflation, bonds, global policy, et cetera. But here’s the thing is tech is going to continue to be critical to our world. Memory, as long as compute scales and grows memory has to scale and grow with it. We know that Micron’s very well positioned. They’ve diversified their business, they’ve gotten into automotive, they’ve gotten into data center. Of course, they’ve got a really strong business in mobile. I just think, like I said, I don’t know if we’ll get a V, Pat, but it may be a U. I like a V personally, but maybe a prolonged U while we sort of wait to figure out what’s going on in the world, in the economy.

But tech is not going to be any less important. All these tasks, AI, automation, all these stuff requires more and more and more and more compute. And with compute, you need memory, you need storage. These are the things that are going to come along with it. So yes, pull back. Yes, not looking great. This next earnings, which should be very interesting. But I’ve said that the last three and they’ve all been a little better than I expected. So crossing my fingers because there is a lot of bad data out there. But you know what, Pat? We’ve been through this before. We’ll get through it again and semis will continue to eat the world.