Market Snapshot
briefing.com
| Dow | 32875.59 | -506.23 | (-1.52%) | | Nasdaq | 10355.59 | -293.63 | (-2.76%) | | SP 500 | 3800.88 | -77.98 | (-2.01%) | | 10-yr Note | 0/32 | 3.67 |
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| | NYSE | Adv 673 | Dec 2333 | Vol 823 mln | | Nasdaq | Adv 1446 | Dec 3099 | Vol 5.0 bln |
Industry Watch
| Strong: -- |
| | Weak: Information Technology, Consumer Discretionary, Communication Services, |
Moving the Market
-- Reacting to disappointing earnings reports from Micron (MU) and CarMax (KMX)
-- Influential hedge fund manager David Tepper telling CNBC that he is leaning short the equity market because he believes central banks will keep tightening and that rates will remain high for a while
-- Thin holiday trading conditions
-- Better than expected Q3 GDP and weekly initial claims data that has fueled concerns about Fed tightening
-- Downside leadership from mega cap stocks
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Closing Summary
22-Dec-22 16:30 ET
Dow -348.99 at 33032.83, Nasdaq -233.25 at 10415.97, S&P -56.05 at 3822.81
[BRIEFING.COM] The positive bias driving yesterday's gains dissipated today amid thinner holiday trading conditions. Market participants were reacting to disappointing earnings results and commentary from Micron (MU 49.43, -1.76, -3.4%) and CarMax (KMX 57.20, -2.17, -3.7%), a dour Leading Economic Indicators report, and some cautious-sounding remarks from influential hedge fund manager David Tepper on the market's prospects.
The market's concerns about the Fed potentially overtightening and causing a deeper economic setback, which has plagued investors for most of December, were stoked by the following factors:
- Micron noted it will be cutting approximately 10% of its staff in response to challenging industry conditions.
- CarMax said it expects widespread inflationary pressures, climbing interest rates, and low consumer confidence to remain headwinds for unit sales.
- The November Leading Economic Index was down 1.0% (Briefing.com consensus -0.4%), logging its ninth straight monthly decline.
- David Tepper said he is leaning short the equity markets as he expects the Fed and other central banks to keep tightening and for rates to remain high for a while, making it "difficult for things to go up." His comments resonated with market participants who recalled the hugely successful "Tepper Bottom" call he made in March 2009.
There was a bit of good news in play, too. The third estimate to Q3 GDP showed an upward revision to 3.2% (Briefing.com consensus 2.9%) from the second estimate of 2.9%, and weekly initial claims held at a remarkably low level of 216,000 (Briefing.com consensus 225,000) for the week ending December 17 that is consistent with a tight labor market.
That good news did not offer support to the broader market presumably due to the understanding that it should persuade the Fed to remain on a tightening path. There was a compounding effect in that understanding since the data followed shortly after David Tepper told CNBC that he thinks the Fed and other central banks will keep tightening beyond what the market currently believes.
The resulting retreat was broad in nature with the major indices moving noticeably lower right out of the gate. The Nasdaq, S&P 500, and Dow were down 3.7%, 2.9%, and 2.4%, respectively, at today's lows.
The S&P 500 was stuck below the 3,800 level and Tuesday's low (3,795) for most of the session before the main indices managed to pare some of their losses in the afternoon trade. There was no specific news catalyst to account for the bounce, which appeared to be driven by some speculative bargain hunting interest following the early washout.
All 11 S&P 500 sectors closed in the red. The countercyclical health care (-0.2%) and consumer staples (-0.3%) sectors showed the slimmest losses while the heavily weighted consumer discretionary (-2.6%) and information technology (-2.5%) sectors fell to the bottom of the pack.
The consumer discretionary sector was weighed down by ongoing selling pressure in Tesla (TSLA 125.35, -12.22, -8.9%). This comes after news that Tesla will offer $7,500 discounts on Model 3 and Model Y cars this month, according to Reuters.
- Dow Jones Industrial Average: -9.1% YTD
- S&P Midcap 400: -14.9% YTD
- S&P 500: -19.8% YTD
- Russell 2000: -21.9% YTD
- Nasdaq Composite: -33.0% YTD
Reviewing today's economic data:
- The third estimate for Q3 GDP revealed that consumer spending increased 2.3%, versus 1.7% in the second estimate, and 2.0% in the second quarter. That upward revision helped drive an upward revision for Q3 GDP growth to 3.2% (Briefing.com consensus 2.9%) from the second estimate of 2.9%. The GDP Price Deflator was revised up to 4.4% (Briefing.com consensus 4.3%) from 4.3%.
- The key takeaway from the report is that growth in the third quarter was stronger than previously expected and above potential, which is also why the Fed continued to raise rates aggressively in the third quarter.
- The latest weekly initial claims report won't silence the concerns about future Fed tightening either. Initial claims for the week ending December 17 increased by 2,000 to 216,000 (Briefing.com consensus 225,000). Continuing claims for the week ending December 10 decreased by 6,000 to 1.672 million.\
- The key takeaway from the report is that initial claims remain at remarkably low levels associated with a tight labor market. In turn, a tight labor market will remain associated with more Fed tightening.
- Leading Economic Index fell 1.0% in November (Briefing.com consensus -0.4%) following a revised -0.9% reading in October (from -0.8%).
- Weekly EIA Natural Gas Inventories showed a draw of 87 bcf versus last week's draw of 50 bcf
Looking ahead to Friday, market participants will receive the following economic data:
- 8:30 ET: November Durable Orders (Briefing.com consensus -1.0%; prior 1.0%), Durable Orders ex-transportation (Briefing.com consensus 0.1%; prior 0.5%), November Personal Income (Briefing.com consensus 0.3%; prior 0.7%), Personal Spending (Briefing.com consensus 0.1%; prior 0.8%), PCE Prices (Briefing.com consensus 0.2%; prior 0.3%), and core PCE Prices (Briefing.com consensus 0.3%; prior 0.2%)
- 10:00 ET: November New Home Sales (Briefing.com consensus 600,000; prior 632,000) and final December University of Michigan Consumer Sentiment survey (Briefing.com consensus 59.1; prior 59.1)
Market making upside moves ahead of the close
22-Dec-22 15:30 ET
Dow -374.56 at 33007.26, Nasdaq -245.56 at 10403.66, S&P -60.68 at 3818.18
[BRIEFING.COM] The stock market is on a steady incline heading into the close.
Looking ahead to Friday, market participants will receive the following economic data:
- 8:30 ET: November Durable Orders (Briefing.com consensus -1.0%; prior 1.0%), Durable Orders ex-transportation (Briefing.com consensus 0.1%; prior 0.5%), November Personal Income (Briefing.com consensus 0.3%; prior 0.7%), Personal Spending (Briefing.com consensus 0.1%; prior 0.8%), PCE Prices (Briefing.com consensus 0.2%; prior 0.3%), and core PCE Prices (Briefing.com consensus 0.3%; prior 0.2%)
- 10:00 ET: November New Home Sales (Briefing.com consensus 600,000; prior 632,000) and final December University of Michigan Consumer Sentiment survey (Briefing.com consensus 59.1; prior 59.1)
S&P 500 fighting to push past 3800
22-Dec-22 15:00 ET
Dow -506.23 at 32875.59, Nasdaq -293.63 at 10355.59, S&P -77.98 at 3800.88
[BRIEFING.COM] The main indices are still trying to climb off session lows with the S&P 500 reclaiming a position above Tuesday's low (3,795) and the 3,800 level.
It's still a decidedly poor showing for the stock market today. All 11 S&P 500 sectors remain trading down by at least -0.6%.
The Treasury market continues to trade in mixed fashion. The 10-yr note yield is down one basis point to 3.67% and the 2-yr note yield is up two basis points to 4.24%.
Lam Research falls on Micron sympathy; Carnival and cruise peers slip
22-Dec-22 14:25 ET
Dow -652.76 at 32729.06, Nasdaq -343.01 at 10306.21, S&P -96.17 at 3782.69
[BRIEFING.COM] The S&P 500 (-2.48%) sits firmly in second place on Thursday afternoon, down about 96 points.
S&P 500 constituents Lam Research (LRCX 403.91, -43.96, -9.82%), Carnival (CCL 7.68, -0.80, -9.43%), and Caesars Entertainment (CZR 41.65, -3.26, -7.26%) are among today's worst performers. Semi equipment name LRCX slips on Thursday after chipmaker Micron (MU 48.73, -2.46, -4.81%) cut 2023 CapEx guidance, CCL fades off yesterday's post-earnings gains, while CZR falls despite news that Macau plans to lift coronavirus testing requirements for incoming air passengers.
Meanwhile, shipping giant FedEx (FDX 172.78, +2.79, +1.64%) is today's best performer.
Gold sharply lower on Thursday
22-Dec-22 14:00 ET
Dow -755.41 at 32626.41, Nasdaq -372.74 at 10276.48, S&P -108.28 at 3770.58
[BRIEFING.COM] With about two hours to go on Thursday the tech-heavy Nasdaq Composite (-3.48%) is still the worst-performing major average.
Gold futures settled $30.10 lower (-1.6%) at $1,795.30/oz, spooked by today's strong GDP number.
Meanwhile, the U.S. Dollar Index is up about +0.4% to $104.56.
Page One
Last Updated: 22-Dec-22 09:02 ET | Archive
Buying momentum falls flat
The momentum of the rally the stock market enjoyed yesterday has not carried over this morning. Instead, it has gone flat. There is no momentum at the moment.
The ostensible reasons for the lack of carryover momentum include the following:
- Disappointing earnings reports from Micron (MU) and CarMax (KMX)
- Congress being at a standstill on the government funding bill due to a dispute regarding an immigration amendment
- Influential hedge fund manager David Tepper telling CNBC that he is leaning short the equity market because he believes central banks will keep tightening and that rates will remain high for a while
- Better than expected Q3 GDP and weekly initial claims data that has fueled concerns about Fed tightening
- The S&P 500 meeting resistance at its 50-day moving average (3,883)
- Waning conviction as market participants bow out to enjoy other holiday pursuits
Currently, the S&P 500 futures are down 34 points and are trading 0.9% below fair value, the Nasdaq 100 futures are down 137 points and are trading 1.2% below fair value, and the Dow Jones Industrial Average futures are down 220 points and are trading 0.7% below fair value.
The lack of follow through buying interest is consistent with the broader downtrend that has prevailed this year. Yes, there have been periods when big gains have been registered, but those big gains have been sold into in a manner that is consistent with a bear market governed by economic and earnings growth concerns.
Micron and CarMax played into those concerns perfectly when reporting their results after yesterday's close. To that end, Micron said it will cut approximately 10% of its staff in response to challenging industry conditions and CarMax said unit sales suffered due to affordability pressures and that it expects headwinds to remain "due to widespread inflationary pressures, climbing interest rates, and low consumer confidence."
Yesterday's December Consumer Confidence report was stronger than expected, yet CarMax's commentary underscores that consumers say one thing and often do another. In other words, soft survey data is not to be trusted as much as hard economic data and the hard economic data of late suggests consumer spending is weakening.
That wasn't the case in the third quarter, however. The third estimate for Q3 GDP revealed that consumer spending increased 2.3%, versus 1.7% in the second estimate, and 2.0% in the second quarter. That upward revision helped drive an upward revision for Q3 GDP growth to 3.2% (Briefing.com consensus 2.9%) from the second estimate of 2.9%. The GDP Price Deflator was revised up to 4.4% (Briefing.com consensus 4.3%) from 4.3%.
The key takeaway from the report is that growth in the third quarter was stronger than previously expected and above potential, which is also why the Fed continued to raise rates aggressively in the third quarter.
The latest weekly initial claims report won't silence the concerns about future Fed tightening either. Initial claims for the week ending December 17 increased by 2,000 to 216,000 (Briefing.com consensus 225,000). Continuing claims for the week ending December 10 decreased by 6,000 to 1.672 million.
The key takeaway from the report is that initial claims remain at remarkably low levels associated with a tight labor market. In turn, a tight labor market will remain associated with more Fed tightening.
The 2-yr note yield, at 4.21% ahead of the report, is up two basis points now to 4.24% and the 10-yr note yield, at 3.65% ahead of the report, is back to unchanged at 3.68%.
Those aren't big moves per se, but like stocks, Treasuries have seen a loss of buying momentum.
-- Patrick J. O'Hare, Briefing.com
Tesla's rough year takes turn for the worse as demand concerns return to spotlight (TSLA)
It's been a whirlwind of a week for Tesla (TSLA) as the EV maker continues to suffer the consequences from Elon Musk's controversial acquisition of Twitter while demand concerns also continue to swirl. On the latter point, the stock is taking another big hit today after Reuters broke a story that TSLA has doubled its discount on its Model 3 and Model Y vehicles to $7,500. With today's losses, TSLA shares are now lower by nearly 15% for the week and are down by over 60% for the year.
Today's news is the strongest evidence yet that cracks are emerging in the demand story for TSLA.
- The company is notoriously stingy for offering discounts in the U.S., mostly because it hasn't needed to be promotional in the past. It is worth pointing out, though, that some would-be TSLA buyers have been holding off on making a purchase until 2023, when the new tax credits are expected to kick in.
- The exact requirements surrounding that tax credit were thrown into flux earlier this week when the U.S. Treasury Department said that it was postponing its decision on battery requirements. To entice buyers to make a purchase now, rather than waiting on a final resolution on the tax credit, TSLA made the aggressive move of doubling its discount.
In isolation, today's news may not be overly troubling and could be mainly explained away by the tax credit situation. However, when combined with a few other recent developments, the steep discount really solidifies the decelerating demand narrative.
- Following a Bloomberg report on December 5 that stated that TSLA was cutting its December Model Y production by 20% in Shanghai, Reuters followed up that story a few days later with news that TSLA will completely suspend production during the last week of 2022.
- Rewinding a bit further, in October, TSLA cut prices on the Model 3 and Model Y in China by 5-10%.
- During the Q3 earnings call, CFO Zachary Kirkhorn acknowledged that deliveries for FY22 may not meet its growth target of "50% average annual growth over a multi-year horizon."
- However, according to Kirkhorn, the shortfall is more related to transportation and logistics constraints, than demand. Recall that when TSLA reported Q3 production and delivery results on October 3, there was a large discrepancy between production (365K) and deliveries (343K). This difference was caused by challenges in loading huge batches of vehicles onto ships and trains during a timeframe of just a few days.
TSLA isn't immune to the dimming macroeconomic picture, but its issues run a bit deeper. Many argue that Musk's antics and rants on Twitter are tarnishing TSLA's brand and are turning off some buyers. There was some relief earlier this week when Musk said that he would abide by the results of his own Twitter poll and step down from his CEO role of Twitter. That joy was short-lived though as shares of TSLA quickly resumed their free-fall. Sentiment hasn't been this negative on TSLA in a long time, which makes the stock pretty compelling to some investors, including Cathie Wood of Ark Invest. For the stock to reverse course, though, the situation between Musk and Twitter must become more tenable for investors.
MillerKnoll avoids the market sell-off, springing to life on upbeat Q2 results (MLKN)
Office furniture manufacturer MillerKnoll (MLKN +7%) is springing to life today after surpassing analysts' earnings and sales expectations in Q2 (Nov). The company's upbeat results follow rival Steelcase (SCS), which topped bottom-line estimates in NovQ, but missed sales forecasts earlier this week. MLKN also guided Q3 (Feb) numbers in line with consensus.
MLKN's ability to succeed during an unfavorable environment can be attributed to its strategic emphasis on diversifying its business model over the past few years. This includes expanding its global retail operations to over $1.0 bln in annual revenue and merging Herman Miller and Knoll, creating additional opportunities to bring its portfolios to new geographies.
- Geographic diversification was critical to MLKN's 4.0% sales growth yr/yr in Q2 to $1.07 bln, as different regions are in varying phases of return to the office. As a result of workers returning to the office quicker in many areas relative to the Americas, revs grew 7.2% yr/yr in MLKN's second-largest International Contract and Specialty segment. Adjusted operating margins also expanded, gaining 180 bps yr/yr.
- Meanwhile, in MLKN's largest Americas Contract segment, although uncertain economic conditions pressured order levels, with customers extending purchasing decisions, the company's price increases and cost synergies improved profitability, with adjusted operating margins expanding 560 bps yr/yr. Sales also still grew 6.1% yr/yr.
- MLKN's Global Retail segment lagged in Q2, as sales ticked 2.8% lower yr/yr on an ongoing slowdown in the housing market, particularly in luxury. This comment is somewhat surprising after Williams-Sonoma's (WSM) Pottery Barn racked up another robust quarter with a +19.6% comp in OctQ. Although, MLKN's remark does resemble what we heard from luxury furniture maker RH (RH) earlier this month, stating that the next several quarters will pose a challenge as business trends continue to deteriorate.
- Margins were also negatively impacted by elevated inventory-related costs, although this was expected.
- Looking ahead, MLKN predicts sales to decline 2.9% yr/yr at the midpoint of its guidance of $0.98-1.02 bln in Q3. However, MLKN's forecast closely mirrors SCS's FebQ sales guidance, which called for just under flat growth yr/yr. Analysts also expected SCS's FebQ revs to be much higher. MLKN is also proactively taking the appropriate steps to improve its near-term profitability, including optimizing its organizational structure and reducing spending, culminating in around $30-35 mln of annualized expense reductions beginning in Q3.
Overall, MLKN's Q2 numbers stacked up well against SCS. Management's confidence in successfully navigating the current environment was also encouraging, noting that it will remain flexible and nimble. These positive developments may be what the stock needs to reverse its long downward trend.
Paychex heads lower despite EPS beat based on slight revenue miss and comments on the call
Paychex (PAYX -3%) is getting a bit short-changed by investors after reporting Q2 (Nov) earnings this morning. The headline numbers were decent but not great and the guidance was a bit lackluster. PAYX is a provider of human capital management (HCM) cloud-based software. Basically, its software helps companies manage HR, payroll, benefits, and insurance services. HCM is a hot area that's still in the early stages of its growth cycle as many companies have not yet automated these functions.
Why is the stock trading lower despite decent headline numbers?
- PAYX reported decent EPS upside but it was not nearly as large the upside in Q1 (Aug). Probably more troubling was PAYX reporting a revenue miss for the first time since 3QFY19. Granted the miss was very small. It would be fair to call it in-line, but PAYX usually beats. So maybe a slight disappointment there with investors. Operating margin (using total revenue) remains impressive at 39.7%, which was flat yr/yr.
- The guidance was decent with PAYX tweaking its FY23 adjusted EPS outlook to +12-14% from +11-12%. The new guidance computes as $4.22-4.30. The increase is slightly more than the Q2 upside, which implies a small bump in guidance for 2HFY23. Revenue guidance for FY23 inched up to +8% vs +7-8% prior guidance. Perhaps investors wanted to see more robust 2H guidance from PAYX.
- Demand remains strong. However, the company concedes that its clients continue to be challenged by the pandemic, inflationary pressures and a tough labor market. On a positive note, its SMB segment remains resilient.
- While demand remains strong, PAYX continues to see shifts in what offerings clients prefer. During the pandemic, PAYX saw lower demand for adding employer health benefits. The company says it continues to see this trend and some clients are delaying decisions on adding or changing their insurance offering to their employees. Also, last quarter, PAYX mentioned lower medical plan sales and participant volumes. This pattern continued in Q2.
Overall, PAYX benefitted from a tight labor market, which tends to be good for HR outsourcing companies like PAYX. However, we think the combination of the smaller EPS beat, the slight revenue miss and muted guidance is weighing on the shares today. The somewhat bearish comments on companies and their employer health benefits is also likely having an impact. That signals to us that perhaps employers want to be more cautious as we enter 2023. Finally, these fairly lackluster results could lower expectations for other HCM companies (PCTY, PAYC, WDAY) as we kick off earnings season next month.
CarMax sinks as worsening economic conditions drive another double-digit earnings miss in Q3 (KMX)
Another sizeable earnings and sales miss in Q3 (Nov) are sending shares of CarMax (KMX -7%) down a steep hill today. The used vehicle retailer has posted double-digit earnings misses in three of the past four quarters, underpinning a brutal environment for the retail auto industry due to rising interest rates and high inflation. Adding insult to injury, KMX also paused its share repurchases, citing Q3 performance and ongoing market uncertainty; $2.45 bln remained under the company's program. Also worth mentioning, KMX's sell-off is dragging many of its peers down, including Carvana (CVNA) and AutoNation (AN).
- What happened in Q3? Lackluster economic conditions intensified, keeping affordability challenges elevated and draining consumer confidence. As a result, combined retail and wholesale used unit sales plummeted 28% yr/yr, driving KMX's top line decline of 23.7% to $6.51 bln, its worse quarterly decline since its pandemic quarter in 1Q20 (May). At the same time, used unit sales in comparable stores fell -22.4%.
- Meanwhile, profits dropped significantly, reflecting the drop in total unit sales. Although retail gross profit per unit (GPU) remained flat yr/yr at $2,237, wholesale GPU slid 14.6% yr/yr to $966, spotlighting steep market depreciation and retail selectivity (reallocating older vehicles from wholesale to retail to meet the demand for low-priced cars). The combination of underwhelming sales growth and sliding profits resulted in EPS contracting by 84.3% yr/yr to $0.24, KMX's lightest quarter of earnings since 1Q20, and considerably worse than analysts predicted.
- Also, KMX's financing business CarMax Auto Finance (CAF), saw income slip 8.3% yr/yr to $152.2 mln on a contraction in net interest margins and an ongoing increase in the provision for loan losses.
- Surprisingly, even though the retail auto market is struggling as a whole, KMX has begun seeing some recent market share loss. On a YTD basis through October, KMX did gain share per external title data. However, its recent losses are concerning since they could signal further market share loss in the quarters ahead. It also possibly illustrates that KMX does not carry the best deals, a disadvantage during an inflationary environment spurring consumers to hunt for better value.
There were still a few bright spots in Q3. GPU may have seemed weak relative to recent quarters. However, stacked against 2019 levels, numbers were mostly in line. It is also worth noting that KMX continues to be in a solid position to leverage its credit platform to operate its Tier 1 business within its targeted loss range of 2.0-2.5%. KMX is also slowing the velocity of its CapEx spending, targeting approximately $450 mln in FY23 (Feb), down from its previous $500 mln estimate.
Overall, the auto retail backdrop remains unfavorable, throwing numerous obstacles in KMX's path. As such, shares will likely remain volatile over the near term. However, KMX remains upbeat on the long-term health of its business, citing a strong balance sheet and liquidity, and believing current pressures are transitory.
Micron plays the role of "Grinch" for semiconductor space after issuing gloomy earnings report (MU)
Memory chip maker Micron (MU) wasn't expected to provide very merry news when it reported 1Q23 results last night, but there was some hope that its results, outlook, and commentary would reflect a bottoming out in the semiconductor industry. Unfortunately, that wasn't the case as the company missed EPS and revenue expectations, while also offering a gloomy outlook for Q2 and 1H23. CEO Sanjay Mehrotra succinctly summed up the situation by stating that "the industry is experiencing the most severe imbalance between supply and demand in both DRAM and NAND in the last 13 years."
It's well-understood that the plunge in PC demand and the associated high level of inventory at PC and laptop makers has battered semiconductor companies this year.
- A spate of poor earnings reports from Intel (INTC), Advanced Micro Devices (AMD), NVIDIA (NVDA), and others, have hammered that point home. However, that weakness has now spread to other end markets that were previously holding up quite well.
- For instance, MU is now expecting cloud demand for memory in 2023 to grow "well below the historical trend" as large cloud customers like Microsoft (MSFT), Google (GOOG), and Amazon (AMZN) reduce their inventory levels. To illustrate how the landscape has shifted, Mehrotra stated during last quarter's earnings call that cloud demand remains healthy, driven by growth in AI and digital transformations.
- Additionally, the industrial market, which incorporates AI/machine learning and the Internet of Things (IoT), saw a more pronounced slowdown in Q1.
It seems that conditions are likely to worsen before they get better, too.
- After forecasting PC unit sales to decline by a mid-teens percentage in 2022, MU now expects units to decline by a high-teens percentage. For 2023, the company is estimating PC unit volume to decline by low-to-mid single digits on a yr/yr basis, returning the market back to 2019 levels.
- Similarly, the outlook for smartphones has also worsened in recent months with MU anticipating a 10% decline in shipments this year.
While dark clouds currently surround MU, the company is taking decisive action to weather this storm and to emerge on the other side of this downturn in better shape.
- Last night, the company also announced a new restructuring plan that will reduce its workforce by approximately 10%. On the capex side, MU will cut spending on wafer fab equipment by more than 50% in 2023 as it curtails chip supply growth.
- These initiatives will help protect MU's bottom-line until the market begins to turn a corner, which MU currently projects to occur in 2H23.
From a longer-term perspective, MU remains bullish on its prospects, despite some moderation in its growth expectations in the PC and smartphone markets.
- In particular, the company believes that it's well positioned to capitalize on the strong secular trends for semiconductors emerging in the automotive and industrial markets.
- On that note, automotive was the lone bright spot this quarter as revenue grew by about 30%, driven by supply chain improvements and robust demand for next-generation technology such as advanced driver assistance systems and infotainment systems.
The semiconductor industry is notorious for these boom or bust cycles and it can be difficult to keep an even-keel during these wild swings. There is likely some more pain ahead for MU and its counterparts, but the company is making the right moves to position itself for the next upswing. For the patient investor who's willing to take on some risk, we believe that now may be the time to start taking another look at MU.
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