"Exclusive Investment Workshop" Hot Topic Analysis: Micron Technology soared after earnings, is everything back to normal?

After yesterday's market close, $Micron Technology (MU.US)$ announced the latest quarterly earnings, with performance exceeding market expectations while also providing optimistic earnings guidance (Beat and Raise). Micron's stock price surged, sweeping away previous declines, rising nearly 15% after-hours, and continuing to rise in night trading at the time of writing.

In the fourth quarter of 2024 (June-August), the company's revenue was $7.75 billion, a year-on-year increase of 93.3%, market expectations were $7.66 billion; adjusted EPS was $1.18, turning a loss into a profit year-on-year, market expectations were $1.12. Revenue for the next quarter is expected to be between $8.5 billion and $8.9 billion, with adjusted EPS guidance of $1.66 to $1.82, all exceeding Wall Street expectations.

Micron management stated that the company is currently in the 'best competitive position ever', projecting substantial revenue records for the 2025 fiscal year and significant profitability improvement. As a leader in memory chips, Micron's production of High Bandwidth Memory (HBM) has become a core product in the AI era. Among all memory chips, HBM is considered most suitable for AI training and inference.

In the last quarter, Micron's performance exceeded expectations but guidance fell short, leading to a continued pullback in the stock price. This quarter's performance and guidance both showed impressive results, taking into account the post-market gains, with the stock price already breaking through the neckline formed at the end of August, also forming a double bottom pattern from a technical standpoint.

It is worth noting that since the Fed rate cut, the market seems to have turned its focus back to tech stocks. While small-cap stocks and trades related to US bonds had the upper hand as rate cut expectations brewed, this trend recently reversed. Performance since September 19th (day after the rate decision meeting) shows the Nasdaq 100 rising over 3%, Nvidia also reclaimed the $300 billion market cap milestone yesterday. Meanwhile, the Russell 2000 index fell by 0.46% during the same period, and TLT, tracking long-term bonds, has been falling daily after hitting highs. Wade Bush stated that the rate cut has given the tech stock trading a 'green light,' expecting good returns by the end of this year or even into 2025.

The options volatility analysis tool shows that micron technology's implied volatility is at a relatively high level before the earnings release. There may be an IV Crush after the earnings announcement, theoretically more favorable to the buyers of options. Mooers can deploy relevant strategies based on market conditions at that time.Of course, if you are bullish on the performance of technology stocks as a whole, choosing to track the nasdaq 100 with QQQ may also be a good choice. The scale of tracking the technology indices IYW and FTEC is also over tens of billions of dollars.