Why Micron Stock Is Up Today
Key Points
SK Hynix reported 632% operating-profit growth and expects memory shortages through 2030.
Micron’s latest quarterly revenue reached $54.23 billion, up from $11.32 billion a year earlier.
Tight supply could support Micron’s pricing power, though memory remains a cyclical industry.
Micron Technology (NASDAQ:MU) stock is on the rise, up 5.5% as of 2:24 P.M. ET on Wednesday, Oct. 28, after a rival memory maker reported a strong quarter.
The S&P 500 and the Nasdaq Composite were up 0.1% and down 0.2%, respectively.
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SK Hynix expects shortages through 2030
The South Korean chipmaker SK Hynix reported its Q3 numbers on Wednesday, revealing revenue grew 328% year over year, reaching 104.6 trillion won -- $78.9 billion. Operating profit jumped an incredible 632%.
Management said it expects demand to exceed supply through 2030, citing the difficulty of manufacturing advanced chips and the time needed to build factories.
Image source: Getty Images.
Tight supply could support Micron's pricing
The stellar quarter, and the expectations of a continued supply crunch through 2030, is driving up rival memory makers, like the U.S. based Micron. Investors have more reason to expect its pricing power will last in the midst of a shortage.
Micron already has strong growth to defend
Micron's latest results, released at the end of September, were just as impressive as SK Hynix's. Revenue reached $54.23 billion, up from $11.32 billion a year earlier, and the company's GAAP net income hit $37.70 billion, up from $3.2 billion a year earlier.
While the industry is still seeing record numbers, memory is an industry that traditionally follows a boom and bust cycle. That's important to keep in mind in the midst of all the positive news.
Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy.