원문 보기
We have some bad news for semiconductor companies, including Micron, SanDisk, SK Hynix, Samsung, and others, as news from China about a new technological development by one of the semiconductor companies there calls into question the competitive advantages of the aforementioned firms. So I wanted to share with you the details of this statement and what it might mean for some competitors, and more specifically—is this an opportunity to buy Micron and SanDisk shares on the dip?
, stocks, including Micron, SK Hynix, Samsung and other companies in the South Korean market, fell by 2–4% on the back of this news. The news was that Chinese memory manufacturer ChangXin Memory Technologies (CXMT) announced significant progress in developing a new memory cell aimed at increasing data storage density—an area of innovation that the world's largest memory manufacturers, such as Samsung, SK Hynix, and Micron, are also working on.
So news of this competitor's technological breakthrough pushes the shares of all other companies down. And by now we should be used to it, right? An announcement by one company in one industry or part of the world causes the shares of other companies and competitors in other regions to fall. And, interestingly, most of the news that causes semiconductor stocks to fall comes from China.
When cheaper, open-source models from China make progress and improvements that promise lower prices or improved technology, it causes shares of other companies around the world, including the United States, to decline. CXMT plans to introduce this new server memory product built on this architecture by the end of the year, which is an extremely fast development.
They announced this at an industry event in Shanghai last weekend. So what do I think this means for Micron? Interestingly, I wanted to share with you a moment from our live Q&A session today . As you know, every month I host a live Q& A session for my channel subscribers. It usually takes place on the first Monday of the new month, but this time, due to a scheduling conflict, I moved it to the second Monday of the month.
So on Monday, October 12th, we had that question and answer session. And there was an interesting question from one of my channel subscribers who asked: why am I more optimistic about Nvidia than about Micron? They are similarly generating significant surges in revenue and operating profitability as a result of the boom in demand for AI, and one could argue that Micron is performing even better, and it is .
If we look at revenue growth and operating margin, Micron has been outperforming Nvidia in recent quarters. Micron just posted two consecutive quarters with operating margins above 80 percent. I have never seen a company do this before, even once in my entire professional career, during which I have researched companies for 2-4 thousand hours a year, studying hundreds of companies and thousands of financial reports.
Before Micron, I had never seen a company achieve an operating margin above 80% in any quarter. Micron just did this for two consecutive quarters and is forecasting a third quarter of similar performance. So, impressive figures, right? Micron is showing the best results among all the companies I see right now.
But still, I rate Nvidia higher in terms of investment opportunity compared to Micron. I have considered Micron an investment opportunity for several years now, and I have reiterated this repeatedly this year. So, I'm optimistic about both companies, but more so about Nvidia. And this is an example of why that is the case.
I believe, and most analysts agree, that Nvidia has a stronger competitive advantage compared to Micron. Nvidia's technology has a much more robust protective moat than Micron's. And today we see evidence of this. Over the weekend, news broke of developments that cast doubt on Micron's dominance. And now SK Hynix, Samsung, and Micron are very close to each other in terms of technology.
It can be argued that SK Hynix has better high- bandwidth memory. They definitely have a larger market share in a certain category thanks to HBM technology. So, Micron is not a cutting-edge leader in its industry like Nvidia, which is confidently at least one step ahead of its competitors. And I would say that it is two steps ahead of its competitors.
It will be difficult for anyone to replicate what Nvidia offers its hyperscaler partners and other companies seeking to advance artificial intelligence. So for this reason, I am more optimistic about Nvidia than about Micron. But I'm still optimistic about Micron. After today's market reaction, Micron shares are trading at $989.
I calculated the fair value at $1,400. So I see a growth potential of about 42% over the next 12-18 months for Micron. The industry's production capacity is sold out for this and next year. And Micron even says that 2028 will likely be the year when their products will be sold out in advance. So, whatever the consequences of this development on the part of the Chinese memory company, they are unlikely to be felt before 2028.
Now, in the contracts that Micron signs with its customers, there are certain provisions that can lead to a decrease in the selling price of components that it has already committed to supply. Remember , Micron mentioned the price range in those long-term strategic agreements with customers. So, if the average selling price of these components falls, it will be a negative: even if the company sells everything, the average selling price may be lower.
And this could be a consequence of increased competition, which I expect will happen anyway. When an industry is in a position where a company is reporting operating margins of over 80%, and has competitors like SK Hynix and Samsung that may be making similar products, as well as other companies in related industries that may be expanding into these categories, competition will increase.
And I already predicted and expected this. And again, that's one of the reasons I didn't put Micron above Nvidia and some other companies that I'm more bullish on than I am on Micron. So, answering the question: is this an opportunity to buy Micron stock? I think so. Is this news negative for Micron?
I think so, but there's enough of a margin of safety here to still consider this as an opportunity to buy Micron. So, I wanted to also mention SanDisk in this video because it's a company I haven't updated on in a few weeks, and I thought I'd take the opportunity to update my fair value assessment of SanDisk and let investors know whether I also see it a of SanDisk at 1662.
The stock is down 6% today. So, I see about 11-12% growth potential for SanDisk. I'm not as optimistic about SanDisk as I am about Micron. You could say the stock is a little undervalued, but the margin of safety... you know, I usually prefer a 5-10% margin of safety, but in the case of SanDisk I would like it to be a little higher because it's a little riskier.
So I would say these stocks look fairly valued or somewhat undervalued. Is this a buying opportunity on a dip? Of course, if you are an investor with a higher risk tolerance level and are really attracted to getting into these stocks, yes, this could be a buying opportunity. But I would focus on the more undervalued names in these categories, including Micron, even Taiwan Semiconductor Manufacturing Company, Nvidia is still a great option here. I still consider it one of the best stocks to buy right now.
댓글 0