3 Semiconductor Memory Stocks to Watch: MU, IFNNY, and WDC
Semiconductors provide functionality and life to the digital age. Everything from our smartphones, tablets, PCs and even cars are, in some way or another, powered by these tiny silicon-based devices. While providing functionality to a multiplicity of electronic devices in the modern era, semiconductors are also critical to supercharging technological revolutions, including breakthroughs in artificial intelligence (AI), machine learning and quantum computing.
Many of these modern semiconductor applications would not be able to come into fruition if it were not for some of the sophisticated memory chips that power them. Below are three semiconductor memory stocks for investors to watch in 2024.
Micron Technology (MU)
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Micron Technology (NASDAQ:MU) is best known for designing and selling memory products, including NAND flash memory and random-access memory such as DRAM and SRAM. Ever since ChatGPT and other generative AI tools entered the market in the first half of 2023, demand for advanced memory chips has accelerated. In its Q3 and Q4 2023 earnings reports, despite sluggish memory demand for PCs and smartphones, the firm reported seeing sizable demand for chips destined to power AI workloads. Moreover, MU’s guidance did foresee the memory chip maker having a loss in 2024, but this loss was lower than what the market was expecting, which suggests the memory market could be on the rebound.
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Micron’s shares are floating around $81/share, while valuation is hovering around 44.8x forward earnings, which is not as stretched as some other semiconductor public companies.
Infineon Technologies (IFNNY)
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Infineon Technologies (OTCMKTS:IFNNY) designs and manufactures semiconductors and semiconductor-based solutions on a global scale. The company primarily operates in automotive and industrial end-markets. Among the semiconductor solutions the chipmaker sells are a host of memory products. Infineon has been developing NOR flash memory and random-access memory for over 40 years. The chipmaker’s SRAM (static random-access memory) stands out in particular. SRAM happens to be less volatile than DRAM (dynamic random-access memory), allowing for particular applications including satellite imagery.
In their Q1’2024 earnings print, Infineon highlighted current market conditions, and the company does not expect its communications, computing and IoT end-markets to rebound until the second half of the current year. However, the chipmaker is seeing growth in its automotive segment, especially in China.
The company trades at a relatively cheap 15.5x forward earnings.
Western Digital (WDC)
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Western Digital (NASDAQ:WDC) primarily designs, manufactures and sells data storage devices across the globe. These include basic hard drives and USB sticks as well as solid-state drives (SSDs). Western Digital also sells storage products for cloud computing data centers. Because WDC relies heavily on consumer demand for technology, the company has struggled in 2022 and 2023, as people overwhelmingly spent less on consumer tech products than they did during the pandemic. Enterprises were also scrutinizing the price of cloud products as business growth struggled with elevated interest rates.
The company’s fiscal year Q2’2024 results released in late January was a bright spot. Western Digital beat Wall Street estimates and issued rosy guidance. Moreover, WDC saw client revenue increase 3% Y/Y due to an increase in the average selling price of its memory products, which could be another signal the memory market rebound is near.
Similar to Infineon, WDC only trades at 15.1x forward earnings, which could represent a good buying opportunity.
On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Tyrik Torres has been studying and participating in financial markets since he was in college, and he has particular passion for helping people understand complex systems. His areas of expertise are semiconductor and enterprise software equities. He has work experience in both investing (public and private markets) and investment banking.
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