Can Micron Technology (MU) Shine in 2024 Semiconductor Landscape?

Last year, semiconductor sales showed relative weakness as macroeconomic factors clouded the chip industry’s prospects. Global chip sales totaled $46.6 billion in October 2023, 0.7% less than October 2022. However, a recovery in sales is forecasted for 2024 and beyond.

In line with the broader market slump, Micron Technology, Inc. (MU) posted substantial bottom-line losses in the last reported quarter (the fiscal first quarter ended November 30, 2023). Its non-GAAP net loss and non-GAAP loss per share came in at $1.05 billion and $0.95, compared to $39 million and $0.04 in the year-ago quarter, respectively.

The company is trying to boost manufacturing in the United States, beginning with a new $15 billion chip fabrication plant in Boise, Idaho. However, this is a likely response to the risk posed on revenues from China. According to MU’s CEO Sanjay Mehrotra, about a quarter of the company’s revenue comes from China, and “about half that revenue is at risk.”

Given this backdrop, let’s look at the trends of MU’s key financial metrics to understand why it could be wise to steer clear of investing in the stock now.

Examining Fluctuations in Micron Technology, Inc.'s Financial Performance from 2021 to 2023

Observing the reported trailing-12-month net income for MU, we see a fluctuating trend from March 2021 to November 2023. Here are the key points:

From March 2021 to June 2022, there was a steady upward trend in MU's net income.

• In March 2021, the net income was $3.2 billion.
• The net income rose by approximately 2.09 times to reach a peak of $9.92 billion in June 2022.

However, from September 2022, there was a dramatic downturn in net income.

• An initial drop to $8.69 billion was observed in September 2022.
• Net Income decreased further to $6.19 billion by December 2022.

Starting in March 2023, MU started reporting negative net income, indicating a loss.

• In March 2023, the net income was $1.61 billion, a considerable decrease from the previous year.
• An even more severe loss of -$2.91 billion occurred in June 2023.
• In November 2023, the company reported a net loss of -$6.87 billion, the most substantial deduction from the series' start.

In conclusion, MU's net income increased significantly from March 2021 to June 2022. Afterward, it saw repeated declines, ultimately leading to a net loss starting March 2023. The rate of growth from the first value to the last represents a significant decrease in net income. This trend suggests a challenging financial performance over this period.

The trailing-12-month revenue trend of MU over the given time period exhibits significant fluctuations. Noteworthy observations include:

• Starting point: As of March 2021, the revenue stood at approximately $23.50 billion.
• Initial Growth: The company experienced consistent growth in revenue from March 2021 to June 2022, with a peak value of $32.39 billion in June 2022. This represents an increase of $8.89 billion, or a growth rate of about 37.83%, over this time period.
• Decline: However, MU's revenue saw a decline from its peak in June 2022 through to December 2022, where it amounted to $27.16 billion.
• Critical downturn: A more severe downturn was observed from December 2022, with MU's revenue reaching a low of $15.54 billion by August 2023. This represents a decrease of $11.62 billion or a decline rate of about 42.76% in less than a year.
• Recent recovery: According to the most recent data available, as of November 2023, there's been a slight uptick from the previous low to $16.18 billion.

Overall, the revenue has shown a tendency toward decrease in the latter part of the dataset, with revenue ending up at $16.18 billion in November 2023, which is significantly lower than the starting value of $23.50 billion in March 2021.

The total decline amounting to $7.32 billion indicates an overall negative growth rate of about 31.15% between these dates. Despite the recent recovery from August to November 2023, the series displays a general downward trend, especially in the face of previous growth up till June 2022.

The data series represents the fluctuating current ratio values of MU between March 2021 and November 2023. While this timeline features changing current ratios, it predominantly presents an upward trend over time. Noteworthy milestones include:

• The current ratio commences at 3.18 as of March 4, 2021.
• It achieved its highest peak at 4.458 on August 31, 2023.
• However, a noticeable drop is seen in the most recent data to 3.532 on November 30, 2023.

Concerning trends and fluctuations:

• The overall trend indicates that MU has seen steady growth in the current ratio from March 2021 to August 2023.
• Of note is the irregular fluctuation during this period, with sudden peaks and dips. For example, a significant rise from 2.889 to 3.513 is seen between September 2022 to December 2022. This change is followed by a sharp increase to 4.458 by August 2023, the peak of the series, only to conclude with a sizeable decline in November 2023.

The asset turnover of MU displayed a gradual increase from March 2021 through June 2022, followed by a downward trend since September 2022. Here are the key points:

• On March 4, 2021, MU's asset turnover ratio was at 0.44.
• It climbed gradually over the following year and four months, peaking at 0.52 in both March and June 2022.
• Noticeable contraction commenced in September 2022. By December 1, 2022, the measure had fallen to 0.413.
• This downward trend became more pronounced in 2023, with the asset turnover ratio decreasing to 0.235 as of August 31, 2023. This represents the lowest value within the given data series.
• There was a slight uptick in November 2023, when it increased to 0.249.

Looking at the overall performance from the start to the end of the data set, MU's asset turnover has decreased significantly from its starting value, indicating a negative growth rate during this period.

Six-Month Journey of Micron Technology, Inc.'s Share Price Trend

The data provided represents the trend in MU's share prices over a period of six months, from July 14, 2023, to January 3, 2024. Here is a summary of the data's significant points:

• On July 14, 2023, the share price started at a value of $63.53
• The highest growth within one month occurred from November 17, 2023, to December 22, 2023, with the share price increasing from $76.54 to $82.93.
• Despite some fluctuations, a consistent increase was noted throughout the period, contributing to an overall upward trend.
• In September, there was a slight drop in share price, decreasing from $70.79 on September 15, 2023, to $64.04 by August 25, 2023. It then gradually increased again during the following months.
• The highest recorded share price was on December 29, 2023, when it reached $86.37.
• By January 3, 2024, the share price had decreased slightly to $82.26, but it was significantly higher compared to the initial price recorded in July 2023.

Overall, MU experienced a positive and robust growth rate over the six months, with minor fluctuations in September 2023. The year ended on a high note with an impressive share price despite a slight drop at the beginning of January 2024. Here is a chart of MU's price over the past 180 days.

Analyzing Micron Technology's POWR Ratings: Momentum, Sentiment, and Growth Trends

The POWR Ratings grade of MU, which is in the Semiconductor & Wireless Chip category, has remained consistent over the course of several months. The grade is D (Sell). The rank within the category fluctuated but overall reflects a lower rank, which implies a subpar performance. Let's have a look at key points from the data:

• In July 2023, the POWR grade was D (Sell), with the rank within the category moving from 86th to 80th by the end of the month.
• During August 2023, the rank slightly improved to 79th. However, it reset back to 80 by the end of August, while the POWR grade remained a D (Sell).
• The month of September 2023 saw fluctuations where the rank climbed up to 83rd and then came back down to 80th.
• In October 2023, a continuous rise was observed where the rank reached 86th, marking a low phase.
• By November 2023, the rank improved slightly and held steady at 84th.
• In December 2023, the rank further moved up to the 80th position and ended one step better at 75th at the year's end.
• As of January 4, 2024, the POWR grade remained constant at D (Sell) while the rank held steady at 73rd among the 91 stocks.

These figures point toward a stagnant POWR Grade D (Sell) throughout this period for MU, indicating a need for improvement given its ranking in comparison to other stocks in the Semiconductor & Wireless Chip category.

From the POWR Ratings for MU, the three most noteworthy dimensions are Momentum, Sentiment, and Growth. 

Momentum: 

• In July 2023, Momentum had a high rating of 87.
• It saw a drop to 71 in August 2023 but picked up again to 78 by September 2023.
• By October 2023, it had increased again to 82, showing a clear bullish movement.
• However, it reduced slightly to 78 in November 2023.
• By the end of the year in December 2023, it regained its strength and surged to 87.
• Stepping into January 2024, Momentum held strong with a rating of 88. 

Sentiment: 

• July 2023 saw the Sentiment dimension at 68, which grew to 74 by August 2023.
• It dropped slightly to 71 in September 2023 and saw a significant dip to 40 in October 2023.
• However, it rebounded sharply in November 2023 to 82.
• The end of the year, December 2023, saw the highest peak at 93.
• Into January 2024, the Sentiment remained high at 92, signifying a generally positive outlook. 

Growth: 

• The Growth dimension started off relatively low in July 2023 at six but showed a remarkable improvement over time.
• It remained stable at 5 in August and September 2023 before increasing to 8 in October and November 2023.
• Significant growth was observed in December 2023, when it surged to 20.
• This upward trend continued well into the new year, with January 2024 seeing a jump to 44.

How does Micron Technology, Inc. (MU) Stack Up Against its Peers?

Other stocks in the Semiconductor & Wireless Chip sector that may be worth considering are ChipMOS TECHNOLOGIES INC. (IMOS), Photronics, Inc. (PLAB), and Everspin Technologies, Inc. (MRAM) - they have better POWR Ratings. Click here to explore more Semiconductor & Wireless Chip stocks.

What To Do Next?

Discover 10 widely held stocks that our proprietary model shows have tremendous downside potential. Please make sure none of these “death trap” stocks are lurking in your portfolio:

10 Stocks to SELL NOW! >

MU shares were trading at $83.61 per share on Thursday morning, up $1.35 (+1.64%). Year-to-date, MU has declined -2.03%, versus a -1.15% rise in the benchmark S&P 500 index during the same period.

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.

More...