For investors in Micron Technology (MU), 2018 was essentially a tale of two halves, with the bullish sentiment initially experienced in the first half of the year eventually negated and overcome by a wave of uncertainty and downside volatility. In this piece, I will discuss the causes behind the drop in MU since its peak in late May, why the company’s prospects could improve in the second half of 2019, and some of the risks in investing in Micron’s stock. I will also examine MU from a technical perspective, and point out how the divergence between the stock’s fundamentals and technicals could mean that the worst is likely over.
Due to how cyclical and commoditized the memory chip business is, Micron’s stock movements are largely tied to factors like whether price points for DRAM and NAND are increasing or decreasing, supply and demand for Micron’s chips, and the perceived direction of the memory chip industry. For the last few quarters, none of these factors have gone in Micron’s favor, and the company has become a victim of weakening memory chip prices as well as weakness in the broader technology sector.