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PC, Cloud Storage Demand to Drive Micron's (MU) Q4 Earnings
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Micron Technology Inc. (MU - Free Report) is scheduled to report fourth-quarter fiscal 2020 results on Sep 29.
The company’s performance in the soon-to-be-reported quarter is likely to have gained from strong memory-chip demand from PC manufacturers and data-center operators.
Strong Memory Chip Demand
During its fiscal third-quarter earnings call, the company had stated that the coronavirus pandemic-induced lockdown is spurring demand for PCs and notebooks as more and more workers and students are now working and learning from their homes. The trend is expected to have continued in the fiscal fourth quarter as well, thereby aiding its top-line performance.
The work-and-learn-from-home necessity is also spurring demand for cloud storage. Furthermore, the lockdown has boosted the usage of online services globally. Therefore, data-center operators are enhancing their cloud-storage capacities in a bid to accommodate the skyrocketing demand for cloud services, which is fueling demand for memory chips.
However, soft demand across the smartphone and automotive industries is expected to have partially offset the benefits of solid demand from PC manufacturers and data-center operators.
Product wise, Micron’s quarterly DRAM revenues are likely to have improved year over year and sequentially as well. The Zacks Consensus Estimate for DRAM revenues is currently pegged at $3.83 billion, indicating a 24.7% year-over-year increase and 19.1% sequentially.
Revenues from NAND products are likely to have increased to $1.89 billion from the $1.51 billion witnessed in the year-ago quarter and $1.67 billion in the third quarter of fiscal 2020.
Nonetheless, Micron’s heavy dependence on China is a headwind due to the long-standing tit-for-tat trade war between the United States and China. Restrictions on export to Huawei are expected to have hurt top-line growth of this Zacks Rank #5 (Strong Sell) company.
Moreover, higher mix of lower-margin NAND, along with low memory prices and minimal decline in manufacturing cost, is likely to have strained margins.
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PC, Cloud Storage Demand to Drive Micron's (MU) Q4 Earnings
Micron Technology Inc. (MU - Free Report) is scheduled to report fourth-quarter fiscal 2020 results on Sep 29.
The company’s performance in the soon-to-be-reported quarter is likely to have gained from strong memory-chip demand from PC manufacturers and data-center operators.
Strong Memory Chip Demand
During its fiscal third-quarter earnings call, the company had stated that the coronavirus pandemic-induced lockdown is spurring demand for PCs and notebooks as more and more workers and students are now working and learning from their homes. The trend is expected to have continued in the fiscal fourth quarter as well, thereby aiding its top-line performance.
Per IDC data, second quarter (April-June) PC shipments grew 11.2% to 72.3 million. HP (HPQ - Free Report) was the top vendor, followed by Lenovo, per IDC.
Micron Technology, Inc. Price and Consensus
Micron Technology, Inc. price-consensus-chart | Micron Technology, Inc. Quote
The work-and-learn-from-home necessity is also spurring demand for cloud storage. Furthermore, the lockdown has boosted the usage of online services globally. Therefore, data-center operators are enhancing their cloud-storage capacities in a bid to accommodate the skyrocketing demand for cloud services, which is fueling demand for memory chips.
Per the IDC data, second-quarter 2020 (April-June) server sales were strong, which is expected to have benefited Micron. Notably, Hewlett Packard Enterprises (HPE - Free Report) and Dell Technologies (DELL - Free Report) were ranked as the top vendors by IDC.
However, soft demand across the smartphone and automotive industries is expected to have partially offset the benefits of solid demand from PC manufacturers and data-center operators.
Product wise, Micron’s quarterly DRAM revenues are likely to have improved year over year and sequentially as well. The Zacks Consensus Estimate for DRAM revenues is currently pegged at $3.83 billion, indicating a 24.7% year-over-year increase and 19.1% sequentially.
Revenues from NAND products are likely to have increased to $1.89 billion from the $1.51 billion witnessed in the year-ago quarter and $1.67 billion in the third quarter of fiscal 2020.
Nonetheless, Micron’s heavy dependence on China is a headwind due to the long-standing tit-for-tat trade war between the United States and China. Restrictions on export to Huawei are expected to have hurt top-line growth of this Zacks Rank #5 (Strong Sell) company.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Moreover, higher mix of lower-margin NAND, along with low memory prices and minimal decline in manufacturing cost, is likely to have strained margins.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Click here for the 6 trades >>