Why is Micron Stock so Cheap?

There are better microchip stocks right now, even with the hundred-billion-dollar factory. 

Andrew Willis 03 November, 2022 | 15:34
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Andrew Willis: Have you ever come across a stock that you thought was cheap, but didn’t want to buy because of short-term obstacles? Put another way, some stocks are cheap for a very clear reason.

Micron (MU) is one example. We do see strong demand for microchips in the long term, but before that, we expect a decline in revenue at the company of at least 30% next year – which may explain why it’s so cheap. Meanwhile, Micron is investing $100bn in a new factory in New York.

But as sector director Abhinav Davuluri explains, the hundred billion dollars will be spread out over multiple decades – so long-term investors might want to sit on the sidelines at the moment. The move is more like Intel (INTC)’s new facilities in Arizona and Ohio… which are great for marketing and attracting funding from the CHIPS Act. If you’re looking for some moat-worthy stocks on sale at the moment, instead of Micron, consider AMD (AMD) or ASML (ASML)… because it’s much less clear why those are so cheap.

For Morningstar, I’m Andrew Willis.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Advanced Micro Devices Inc68.59 USD-2.67Rating
ASML Holding NV ADR597.70 USD-1.51Rating
Intel Corp28.24 USD-0.70Rating
Micron Technology Inc54.87 USD-0.60Rating

About Author

Andrew Willis  is Senior Editor for Morningstar Canada

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