Investing

How This NVIDIA Supplier Has Micron Shares Reeling Today

Ian Cooper

Published: January 23, 2025 12:59 pm

Shares of Micron (NASDAQ:MU) are down about 3.5% on the day.

Key Points About This Article 

• Shares of Micron are down about $4.50 on the day thanks to Nvidia supplier, SK Hynix.
• Granted, SK Hynix did post a record quarterly profit. Unfortunately, SK Hynix also warned that the 2025 outlook for memory demand would be clouded by inventory adjustments from personal computer and smartphone manufacturers.
• If you’re looking for more stock ideas, don’t forget to grab a copy of our “The Next NVIDIA” reportthat’s free. It details the war between NVIDIA and one stock that rose 114% in 2024. The report is loaded with research on top AI stocks and is available complimentary for a limited time.

Micron is slipping today thanks to Nvidia (NASDAQ:NVDA) supplier, SK Hynix.

Granted, SK Hynix did post a record quarterly profit. In fact, thanks to the artificial intelligence boom and the fact it’s a major supplier to Nvidia, its operating profit of 8.08 trillion won (or $5.6 billion) was well above expectations of 8.02 trillion won.

“With prolonged strong demand for AI memory, the company achieved [an] all-time high result through world-leading HBM technology and profitability-oriented operation,” SK Hynix said in its earnings release.

Unfortunately, SK Hynix also warned that the 2025 outlook for memory demand would be clouded by inventory adjustments from personal computer and smartphone manufacturers. That’s in addition to potential trade policies and geopolitical concerns, they added.

All of which contributed to the downfall in chipmaker stocks, like Micron.

Long-Term, Micron is a Compelling Opportunity

In the short term, we’d avoid the Micron stock until it bottoms out.

Longer-term, it’s a compelling opportunity with strong earnings growth.  For one, Micron is benefiting from stronger demand for memory and data storage products in data centers and other artificial intelligence-powered applications. Two, earnings growth is still strong. In its most recent quarter, the company’s data center revenue was up 400% year over year. Overall revenues were up 84% year over. Year to $8.7 billion. EPS of $1.79 was up nearly 52%.

Moving forward, analysts say MU revenues could grow about 39% year over year to $35 billion this year. They also say EPS could be $6.89 on the year. All of which make MU a standout investment opportunity in the semiconductor market in the long term.