In the span of just two days, the semiconductor industry witnessed some volatility as shares of two prominent companies, Monolithic Power Systems (MPWR) and Micron Technology (MU), took a hit following independent analyses from Edgewater Research.
Monolithic Power Systems experienced a sharp decline of 15% on Monday after Edgewater Research raised concerns that the company might lose some of its business dealings with Nvidia (NVDA), a major player in the AI market. This speculation triggered a wave of selling from investors. The stock attempted a brief recovery, gaining 2% in early trading Tuesday, but eventually fell back below the flat line.
Despite the initial drop, Monolithic Power’s management, through conversations with analysts at Needham, reassured that there were no known technical issues with their components destined for Nvidia’s forthcoming Blackwell AI chips, nor had they received any order cancellations.
On Tueday, it was Micron’s turn to face investor scrutiny. Shares of the memory chip giant fell more than 5% in morning trading after another report from Edgewater suggested caution regarding dynamic random-access memory (DRAM) market dynamics. This report painted a bearish picture, potentially leading to increased selling pressure on Micron’s stock, as noted by Mizuho Securities analyst Jordan Klein, who forecasted a challenging day for Micron due to the research note.
Micron’s stock has been on a volatile path, reflecting the broader industry’s ups and downs. The company has been a beneficiary of the AI chip boom, particularly with its high-bandwidth memory (HBM) products, which are crucial for AI accelerators. This component has been in high demand, pushing Micron’s stock to a 52-week high of $157.54 during the summer. However, recent market sentiments have been swayed by concerns over DRAM pricing and an oversupply of HBM chips, leading to a retreat in stock value.
These events highlight the delicate balance within the semiconductor sector between innovation-driven growth and the inherent cyclicality of the market. As companies like Monolithic Power and Micron navigate these waters, investor reactions underscore the sector’s sensitivity to both technological advancements and market supply dynamics.
Price Action: MPWR is trading 0.39% lower at $644.79, while MU is down 4.80% at $103.79 at press time.
Leave a Reply