has amassed one of the most impressive gains of 235 percent on the market in 2023. This remarkable increase is warranted due to the chipmaker’s top and bottom lines experiencing an astronomical ascent due to the booming demand for artificial intelligence (AI) processors.
However, this year’s significant increase in Nvidia stock price inflated its valuation. The current price-to-sales ratio is 27 times, which is greater than the average price-to-sales ratio of 20 over the past five years. At 65, the trailing earnings multiple is calculated.
While Nvidia seems capable of justifying that valuation thanks to its dominant position in the market for AI chips, which is likely to translate into terrific growth in 2024, investors may be looking for a cheaper alternative to capitalize on the proliferation of AI.
Micron Technology (NASDAQ: MU) is the subject. The memory specialist’s stock has increased by 74% so far this year, and its most recent earnings report indicates that further gains are likely in 2024 as a result of artificial intelligence. Indeed, notwithstanding its recent upswing, Micron stock is currently valued at an exceptionally favorable level. Let us examine the factors that make the acquisition of this chipmaker an immediate no-brainer.
Micron Technology will likely follow the AI trend.
December 20 marked the publication of Micron Technology’s fiscal year 2024 first-quarter results (for the three months ending November 30). Revenue increased by 16% year-over-year to $4.7 billion, surpassing both Wall Street’s forecast of $4.58 billion and the company’s guidance of $4.4 billion.
Quarterly non-GAAP (generally accepted accounting principles) losses incurred by Micron amounted to $0.95 per share. Although the current figure exceeded the loss of $0.04 per share from the corresponding period last year, it remained below Micron’s projected loss of $1.07 per share. The consensus among analysts was that Micron would incur a loss of $1.01 per share. The chipmaker, nevertheless, surpassed expectations due to the strengthening conditions in the memory market.
Previously, the memory market was in dire circumstances due to an oversupply. Demand for memory chips fell as sales of smartphones and personal computers (PCs) dropped off a cliff, leaving memory manufacturers with excess supply that weighed on pricing. The good news is that Micron is now witnessing an “improved supply demand environment in the current calendar quarter [that] gives us additional confidence in the trajectory of our business.”
