Micron downgrade hits chip stocks as Marvell, Nvidia, AMD lead sector lower
Jul. 22, 2022 3:55 PM ET Micron Technology, Inc. (MU), MRVL, NVDA, AMD INTC, QCOM, TXN, AVGO, TSM, GFSBy: Chris Ciaccia, SA News Editor 3 Comments
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Micron Technology (NASDAQ: MU) was hit with a downgrade from Morgan Stanley on Friday, impacting the broader semiconductor industry, as the firm worried over "material volume weakness in all markets."
The firm lowered its rating on Micron Technology ( MU) to underweight from equal weight, but kept its $56 price target, noting that all markets, including hyperscalers, are becoming an issue.
"Our sense is that this is less about demand and more about inventory, as customers in all markets listened to the substance of Micron's commentary - that shipments this quarter and next will be well below production, with a large Micron inventory build by year end - and start to release inventory buffer," the analysts wrote in a note to clients.
The analysts also noted that Micron's ( MU) competition is also getting aggressive on product, with prices down 20% or more sequentially for hyperscale DRAM, between $100 and $105 for 32GB of RDIMMs. The price cuts are only happening if customers take "material volume" but otherwise, prices are still just below $120.
Micron ( MU) shares fell nearly 3% on back of the downgrade. Other semiconductor stocks that are tied to data centers, one area that has shown strength in recent weeks, also fell sharply on Friday, as Nvidia (NASDAQ: NVDA), Advanced Micro Devices (NASDAQ: AMD) and Marvell Technology (NASDAQ: MRVL) all fell between 3% and 5%.
Other semiconductor stocks also fell on Friday, including Intel ( INTC), Qualcomm ( QCOM), Texas Instruments ( TXN) and Broadcom ( AVGO), led by a near 3% decline in Intel.
Taiwan Semiconductor ( TSM) and GlobalFoundries ( GFS) both declined roughly 1.5% in mid-day trading.
Earlier this month, Micron Technology ( MU) said it recovered from a "prolonged power disruption" at its Hiroshima DRAM manufacturing facility, but that the event would result in a productivity loss and wafer scraps and impact its fourth-quarter and the first-quarter of fiscal 2023. |
