Good memory

Micron Technology (Nasdaq: MU) is one of the leading manufacturers of DRAM (dynamic random access memory) products used in consumer PCS and mobile devices, and its products are increasingly being used in cloud server, industrial and other enterprise markets. DRAM makes up nearly three-quarters of Micron’s total revenue. Micron is also a leading supplier of the NAND flash storage devices used in solid-state drives (SSDS), which make up 24 percent of its business.

Micron’s business is cyclical, and its prices rise and fall depending on supply and demand. During the company’s fiscal third-quarter earnings call, CEO Sanjay Mehrotra cited “strong demand across almost all end markets,” including PC, data center, smartphone and 5G. Mehrotra said that Micron has so much automotive demand it can’t keep up, and also pointed to strong demand in industrial markets.

A semiconductor shortage is causing demand to exceed supply right now, and this could last into calendar year 2022. But even when the supply shortage is eventually resolved, Mehrotra expects demand to increase further.

Micron has been a volatile stock in the past, but its stock has grown by more than 1,000 percent over the last decade. Given frequent swings in memory pricing, this is one stock you want to get right when you buy shares. With Micron’s forward-looking price-to-earnings (P/E) ratio recently near 7, this seems a promising time for long-term investors to buy.