Sep 25, 2023

After the Fed announced a rate hike, chipmaker stocks suffered a sell-off, but the sector rebounded on Friday.

MU Daily Chart

Micron Technology (MU) Daily Chart

Micron Technology has retreated from $72 to $68 and could drop to $65 if bearish sentiment returns.

Micron has not performed as well as Nvidia this year, but the sector is hot for investors, and the company could affect sentiment when it reports results on Wednesday.

An early beneficiary of this year’s artificial intelligence boom, Nvidia’s stock price has soared, but every time Nvidia launches a GPU chip, other hardware companies are selling products needed for data centres. Micron technology could be boosted by the launch of high-bandwidth memory technology next year.

Nvidia said it will start shipping its new GH200 Grace Hopper superchip this quarter and will launch new HBM3e memory in 2024. HBM (High Bandwidth Memory) is currently split between SK Hynix and Samsung. A recent analysis report stated that since artificial intelligence systems require large amounts of data for training and inference, HBM technology will become a big winner.

The analyst said that in the first-generation HBM3 market, “Micron was not involved at all.” But the company expects to start shipping HBM3 products early next year.

Micron CEO Sanjay Mehrota said on an earnings call in June that he expected “substantial revenue” from new products in fiscal 2024. The CEO also said that Micron’s HBMS chips are much better than what is currently available.

Micron is still in the early stages of HBM product delivery, but analysts looking ahead will this week gauge its potential based on current performance. Micron’s stock price has risen 40% this year on the back of hype in artificial intelligence and chip-related stocks.

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