Mizuho has issued a cautious update on Micron Technology (NASDAQ: NASDAQ:MU) shares due to anticipated downturns in the DRAM sector.
The firm's memory analyst in Asia, Marcus Shin, has lowered his Average Selling Price (ASP) estimates for conventional DRAM, predicting a more severe price decline in the first quarter of 2025.
The adjustment is expected to lead the DRAM sector into a downturn, influenced by high inventory levels in mobile devices, particularly from China handset Original Equipment Manufacturers (OEMs), and weakening PC markets.
Shin's report suggests that the softer pricing trends and excess supply could be exacerbated by Samsung (KS:005930) shifting more DRAM capacity from High Bandwidth (NASDAQ:BAND) Memory (HBM) to conventional DRAM.
The move by Samsung, which is currently trailing behind Hynix and Micron in HBM, could increase the supply in an already oversupplied market. The full details of Shin's analysis will be discussed in a conference call scheduled for tomorrow morning at 8:30 am ET.
Mizuho's trade desk analyst, Jordan Klein, expressed that the sentiment on memory stocks, particularly DRAM and Micron, is likely to worsen in the near term leading up to Micron's earnings update at the end of September.
According to Klein, the shift in investor sentiment is a common trend where enthusiasm during upturns is followed by negativity with any moderation in demand or pricing trends.
Despite the current challenges, Klein remains more positive than negative on DRAM and Micron. He suggests that Micron's stock could be a buying opportunity if it trends down to $90 or below.
However, he also cautions that the stock may continue to face downward pressure due to sentiment, lack of fast money, and quant buyers, along with weak consumer PC and mobile data points.
In other recent news, NVIDIA (NASDAQ:NVDA) is set to announce its second-quarter earnings, with expectations of a 112% increase in revenue to $28.68 billion. The robust growth forecast comes amidst a positive reevaluation of NVIDIA's business prospects by Truist Securities, resulting in an increased price target for the company's stock. However, concerns have been raised about potential production delays for NVIDIA's next-generation Blackwell AI chips, which could affect revenue growth.
Analysts from Morgan Stanley, Citi, and Melius have maintained a positive outlook on NVIDIA's shares. Morgan Stanley has reiterated its Overweight rating, expressing confidence in NVIDIA's ability to navigate through recent and upcoming challenges. Truist Securities has also modestly raised its earnings per share estimates for NVIDIA for the calendar year 2025 to $3.61, up from the previous estimate of $3.39.
Investors are keenly awaiting inflation data that might indicate the Federal Reserve's future interest rate decisions. The U.S. personal consumption expenditure price index, the Federal Reserve's preferred inflation measure, is set to be released soon. Additionally, detailed GDP data from Germany for the second quarter of 2024 could provide further direction for market movements.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.