Semiconductor stocks have done well amid production snags owing to the pandemic and supply chain constraints. Micron Technology, Inc. (NASDAQ:MU) has led the pack in outperforming the overall market, its stock having more than doubled in value from 2020 lows. Over the past month, the stock has gained 25.39%, outpacing the computer and technology sector, which is up by 4.5%, and the S&P 500 up by 2.7%.
Earnings Estimates
The impressive run came on Chief Financial Officer David Zinsner reiterating that everything is coming up, in terms of market demand and operating results. The executive is optimistic of the opportunities triggered by 5G. He also expects the cloud business to continue growing at an impressive rate.
A specialist in the design manufacturing and sale of memory and storage products, Micron has benefited a great deal amid the digitization drive the company’s products have continued to elicit strong demand as they are commonly used in the cloud server, enterprise client graphics, and networking markets.
Ahead of the company reporting its first-quarter earnings on January 7, 2021, Wall Street remains confident of the semiconductor juggernaut topping estimates. Earnings are expected at $0.70 a share, representing a 45.83% year over year growth. Likewise, revenues are expected to increase by 10% to $5.66 billion thanks to the strong demand for the company’s semiconductor products.
Earnings Outlook
Earnings topping estimates should go a long way in strengthening the company’s sentiments in the market. The 80% plus rally from March lows stems from growing investor confidence about the company’s long term prospects.
Growing demand for chips to power cloud servers as well as working from home devices signals booming business for Micron Technology going forward. Similarly, the company remains well-positioned to benefit, given its competitive edge in the industry.
However, the price change will mostly depend on the management’s discussion of business conditions. Future earnings expectations and outlook is another thing that investors will pay close watch to have an idea of how the company is likely to perform as the COVID-19 pandemic is brought under control amid vaccine distribution.