MU Stock Has More Upside Than Bears See
Micron Technology, Inc. (NASDAQ:MU) stock has tanked about 30% since the beginning of this year, but the fall had little, if anything, to do with the company and more to do with the global market headwinds. Nonetheless, there are two technologies that could change the fate of MU stock in 2016.
Micron may be the biggest and only prominent seller of DRAM chips in the U.S., but its greater reliance on this business has also been the bane of its success. Nobody can question the fact that PC sales are in a perpetual decline now, along with the DRAM chips used in PCs for memory.
However, the market has missed a critical fact here. Just like the semi-conductor industry is evolving, so is Micron. Up until last year, Micron may have largely relied on two of its product lines—DRAMs and SSDs. That is changing this year.
Two Technologies Could Be Game-Changers for MU Stock
Often overlooked, there are two very promising next-generation technologies in the pipeline that are expected to unlock great value for the company by the second half of this year through to next year.
Before I get down to these, take note that the semi-conductor industry has been undergoing an “arms race,” whereby each successive processor released by the industry players was not only smaller than the previous one, but also carried double the number of transistors. We call it Moore’s Law—a phenomenon that lent to revolutionizing the technology industry by producing much smaller, yet much faster, chips.
These smaller, faster processors have found great utility in the rapidly growing industry of the “Internet of Things” (IoT), an ecosystem in which machines communicate with machines through wireless connectivity. This communication will be made possible through super-fast memory and data processing.
I see Micron as one of the biggest winners in this industry because of two of its groundbreaking technologies currently underway, both of which will find great utility in the rising IoT industry.
The first of these is the “Micron Automata” processor. A massive breakthrough in the data processing world, the Micron Automata processor is so fast it can solve complex data problems in the snap of your fingers. Where will it find its utility? Genetic decoding, bioinformatics, biometrics, and network security for government and private sectors, to name just a few areas.
The second is the “Micron 3D XPoint” chip. A next-generation memory chip, the “Micron 3D XPoint” is being created in partnership with Intel, which will not only overtake the super-fast NAND memory chips in speed by 1,000-fold, but also beat the cheaper DRAM chips in pricing.
It will be a game-changing year for Micron stock in 2016 and supporting my conclusion is Morgan Stanley, which upgraded MU stock on Thursday to a price target of $18.00. (Source: “Now Is the Time to Buy Micron (MU), Morgan Stanley Proclaims,” Street Insider, January 21, 2016.)
The Bottom Line on MU Stock
Investors shouldn’t pay heed to the nervous bears abandoning ship. Remember: you cannot make money by blindly following the herd. If you go quarter-by-quarter, you’re not really investing—you’re trading. Trading hasn’t made billionaires; investing has.
In a nutshell, MU stock seems like a promising bet for the long haul and is definitely one investors should keep on their radars.