Micron Stock Suffers as a Result of Deutsche Bank’s Downgrading, Which Cites a Longer-Than-Anticipated Recession

Micron Stock

In premarket trading on Monday, shares of Micron Stock (NASDAQ:MU) fell by about 2% after Deutsche Bank cut its rating on the memory-focused semiconductor maker, citing a deeper downturn than had been expected.

Observing that demand for memory has decreased in the enterprise after being high in the consumer arena, analyst Sidney Ho reduced his rating on Micron (MU) to hold. Ho also mentioned the “weakening” of cloud demand.

The analyst also said that Micron’s competitor in the market, Samsung (OTCPK:SSNLF), has not done the same thing, even though Micron (NASDAQ:MU) has taken multiple steps to limit supply. This is likely to “prolong the decline.”

In a message to clients, Ho stated, “We believe market confidence that the business would soon reach a cyclical low now looks premature.” The company is currently trading at about 1.2 times its book value, which means that the risk-reward ratio is “balanced.” The analyst went on to say that the book value is expected to go down by between 5% and 10% over the next three quarters.

At a ceremony, earlier this month at Taiwan Semiconductor’s Arizona factory, scheduled to open in 2024, CEO of Micron (NASDAQ:MU) Sanjay Mehrotra joined President Joe Biden and a number of other technology executives.

Micron Stock Outlook

The majority of analysts are wary of Micron (NASDAQ:MU). The Wall Street experts rank it as a BUY, while the authors of Seeking Alpha give it a HOLD rating. The Seeking Alpha quant algorithm, which often does better than the market, ranks MU as a HOLD.

The Motley Fool recently listed Micron stock as one of the top 3 AI stocks. As one of the top memory chip manufacturers in the world, Micron Technology benefits from the high memory requirements of AI applications. Other memory chip manufacturers, such as Western Digital, offer a much wider range of products.

Micron’s business is cyclical because the memory market usually has supply gluts that last for several years and then chip shortages. Its last big growth period was in the fiscal years 2021 and 2022, which ended in September of this year. At that time, PC, mobile, and data center markets all wanted more new memory chips than they could get.

How Low Can Micron Technology Stock Go?

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