Micron has a long history of volatility. What does the current drawdown mean for investors?
Micron has a long history of volatility.
What does the current drawdown mean for investors?
Micron (MU +1.87%) has been one of the biggest winners of the AI era.
Over the last year, the stock is up roughly 400%, and over the last three years, the stock has jumped 1,250%. Like other memory stocks, Micron has benefited from a shortage in memory chips, which has driven up prices and sent sector stocks soaring across the board. Among the winners are SK Hynix, Samsung, and Sandisk.
However, in recent months, some doubts have emerged about the memory boom. Micron stock peaked following its fiscal third-quarter earnings report and has struggled to return to that level, despite another blowout earnings report in September.
Micron's recent results are about as strong as any company in history. It just reported 379% revenue growth to $54.2 billion with an operating margin of 80.7%. Operating income jumped 1,100% to 43.8%.
Micron's operating income in its most recent quarter ranks above Apple, Alphabet, and Microsoft, and it's extraordinarily rare for any company to report an operating margin as high as 80%, meaning the company keeps four of every five dollars it earns in revenue, before interest and taxes. The spike in memory prices and surging demand are the primary reasons for those bumper results.
However, those numbers weren't enough to please investors, as the market is wary of the history of cyclicality in the memory sector, and they are betting that Micron's profits will come down significantly once the supply crunch eases.
The stock is now down 23% from its all-time high in June. Let's take a look at the stock's history to make an educated guess at what happens next.
What history says about Micron
Averytin News Financial update.