Navigating the Semiconductor Landscape: Intel vs. Micron in 2024

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Nasdaq Semiconductor Related Newsletter - October 16, 2024

Stock Performance: Intel (NASDAQ: INTC) and Micron Technology (NASDAQ: MU) recently snapped a six-day win streak, with semiconductor and semiconductor equipment companies experiencing a downturn. This decline is part of a broader market adjustment.
Business Overview:
- Intel, the world's top producer of x86 CPUs for PCs and servers, has faced significant challenges, including product delays, chip shortages, and strategic shifts under different CEOs. This has led to a 55% plunge in Intel's stock over the past five years.
- Micron Technology, a leading supplier of DRAM and NAND memory chips, has seen its stock soar 137% over the same period. Micron's technological edge in developing denser chips makes it a preferred supplier for high-end devices.

Market Cycles: Micron's business is highly cyclical, with the memory chip market experiencing boom-and-bust cycles. After a downturn in 2023 due to reduced PC shipments and the end of the 5G upgrade cycle, Micron is seeing a fresh growth cycle in 2024 driven by stabilized PC and smartphone markets and increased demand for solid-state drives (SSDs) and high-bandwidth memory (HBM) chips for AI applications.
Competitive Landscape: Micron faces competition from larger chipmakers like Samsung and SK Hynix, and has been impacted by China's ban on its chips in infrastructure projects. However, Micron's stable leadership under CEO Sanjay Mehrotra has helped it navigate these challenges.

Intel: Intel's revenue declined 14% in 2023, marking its second consecutive year of declining revenue, with adjusted earnings per share (EPS) plunging 37%. Analysts expect further declines in revenue and EPS for 2024. Intel's stock is currently valued at 22 times forward earnings.
Micron: Despite a 49% revenue plunge and an adjusted net loss in fiscal 2023, Micron's revenue jumped 62% in fiscal 2024, returning the company to profitability. Analysts project significant growth in revenue and EPS for fiscal 2025, with the stock valued at 12 times forward earnings.

Micron vs. Intel: Given the current market dynamics and growth prospects, Micron is considered a better buy than Intel. Micron is in the early stages of a new growth cycle, while Intel faces significant challenges that could impact its long-term viability.

Global Presence: Micron Technology operates globally, with a broad portfolio of high-performance memory technologies supporting various applications across computing, consumer, enterprise storage, networking, mobile, embedded, and automotive sectors.

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