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Ho’s previous neutral stance on Micron was shaped by an oversupply of inventory and weak macro-end demand. However, he now believes that the worst of this downcycle has passed. Factors contributing to this assessment include significant production cuts across suppliers and strengthening demand, particularly in AI servers.
A key issue for Micron had been low prices for dynamic random-access memory (DRAM), a type of semiconductor memory widely used in desktop computers and smartphones. Ho noted recent robustness in DRAM pricing, which he expects to be sustainable and likely to accelerate over the next two quarters.
At the Deutsche Bank Technology Conference held in August, Micron’s Chief Financial Officer Mark Murphy expressed optimism about pricing trends. He observed a bottoming out of prices and predicted strengthening through the second half of the year, assuming supply discipline is maintained and volume expansion continues.
As a result of these positive indicators, Ho forecasts that Micron will provide first-quarter revenue and earnings guidance above current Wall Street forecasts. He also anticipates commentary indicating further improvement in subsequent quarters. This could lead to substantial upward revisions in Street estimates for the rest of 2023 and 2024 following the earnings report.
Micron is scheduled to announce its fiscal fourth-quarter earnings on September 27 after market close. The company’s shares were up by 1% at $70.58 on Monday, marking a 41% increase for the stock in 2023.
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