Micron Stock Climbs Ahead of Q2 Earnings. Will it Break Higher?
Micron Stock Climbs Ahead of Q2 Earnings. Will it Break Higher?
Micron Advances Ahead of Q2 Earnings as Chip Sector Optimism Grows
Micron stock (MU) climbed nearly 8% in the final week of trading ahead of its second-quarter earnings results, set to be announced on Tuesday after the bell. That compared to a 1.97% rise in the Nasdaq-100 index (NDX) as investors grew increasingly bullish amid signals that the Federal Reserve may end its rate hiking cycle soon after chaos in the banking sector tempered the Fed’s appetite to tighten policy, as signaled by the Treasury market.
While the chip sector is highly cyclical and typically underperforms during times of slower economic growth, investors are looking ahead to advancing applications such as electric vehicles and artificial intelligence, both of which require computer chips. A technology conference by Nvidia—a GPU maker—further injected some bullish sentiment into the sector this week with the introduction of new chips, which are highly suitable for AI applications.
Earnings Figures Set to Decline, but Investors May Shake Off Weakness
The Boise-based chip maker has received several downgrades from analysts over the past several months. The most recent came from Citi analyst Christopher Danely, citing an inventory write-down. An inventory write-down is an accounting method that marks down the value of a firm’s assets. Despite that, Citi and other analysts remain positive about MU’s long-term outlook.
Investors expect to see earnings per share (EPS) decrease to -$0.80 for the quarter from $2.14 a year ago, according to Yahoo Finance. The slowdown in sales is responsible for the bulk of the contraction in growth, but the inventory write-down, depending on its size, remains an uncertainty. Investors will also be tuned into guidance, capital expenditures and cost-cutting efforts.
Analyzing Micron’s Chart – Bulls in Control but Will it Last?
Micron stock recently recaptured the 200-day Simple Moving Average (SMA,) and the price is heading towards its 2023 high of 64.34 made in January. Bulls previously had trouble clearing that area back in November and August. That said, a break above the zone around those previous highs may result in further strength.
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