Micron Technology, Inc. (NYSE:MU) is just about the biggest thing to come out of Boise, Idaho, besides the potato.
Begun in 1978 in the basement of a dentist’s office, four partners began building what would become one of the largest and most well-respected memory chip makers in the world.
The success that they have brought into being has been a function of their ability to adapt and pivot. Many hardware makers have come and gone over those four decades, but MU has continued to grow.
MU Stock Is an Innovator
This is a firm that built its first DRAM (dynamic random access memory) chip in 1981, long before the advent of the internet, online gaming, content streaming, digital cameras and mobile phones.
But MU kept innovating, and it has paid off handsomely. Over the past decade, MU has easily doubled the performance of competitors Intel Corporation (NASDAQ:INTC) and Western Digital Corp (NASDAQ:WDC). And in the past year, the outperformance has been even more impressive — MU is up 175%, almost tripling WDC’s return, and beating INTC by an order of magnitude.
Some of its recent fortunes have turned on the fact that the DRAM and NAND (named after a type of gate in a circuit) markets are in a boom cycle right now. These memories are key to modern-day electronics, everything from mobile phones to Big Data servers.
There’s no doubt that this sector is volatile. And Micron’s ability to thrive in these feast-or-famine, dog-eat-dog business cycles is testament to the company’s ability to find next solutions before customers even have a significant need.
Also, the thing to remember about some of these tech cycles is that many are changing duration due to the leapfrogging of technologies. The better they make chips, the more demand for chips there is and the longer the upcycle lasts.
For instance, in the case of memory, as speeds increase, there is increasing demand from hardware makers to get as close to 0 latency as possible (i.e., no delay between the action and the command). It also requires display makers to eliminate what’s known in the industry as the ‘screen door effect’ or SDE. This is when viewers can see fine lines separating the pixels.
Getting rid of SDE is going to be especially important as virtual reality (VR) and augmented reality (AR) headsets become more common. VR and AR are far more than new ways for gamers to entertain themselves. They are a way for all of us to interact with our world — both real and imaginary — in a totally immersive experience.
And to get there, it’s going to take huge leaps in DRAM technology, especially in mobile devices, which are used in the current generation of VR goggles. Micron is already stepping up to the challenge.
Another important fact to bear in mind is, while MU has benefited from DRAM pricing and demand, no one is taking into account the growing demand for NAND devices. Analysts anticipate a bull market for NAND to continue for at least another year.
Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip Growth, Emerging Growth, Ultimate Growth, Family Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.