Micron's Chinese Rival CXMT Just Grew Its Sales More Than Sevenfold. I'd Buy Micron Stock Now.
What does a sevenfold sales leap for a Chinese rival say about the memory maker's stock?
Micron Technology's shares have faced a challenging period, with the stock falling around 26% from its June high. However, on October 30, China's largest DRAM maker, CXMT, reported impressive revenue growth. CXMT's third-quarter revenue surged 613% year-over-year, reaching approximately $18 billion, a sevenfold increase compared to the same period last year.
This remarkable growth can be attributed to a global DRAM shortage, which drove up both sales volumes and prices. CXMT's gross margin reached an astounding 89.5% in the third quarter, up 2 percentage points from the previous quarter, and its net profit attributable to shareholders was around $8 billion, marking a significant turnaround from a loss in the previous year.
While CXMT's revenue was only a third of Micron's $54.2 billion in the same quarter, Micron's cloud memory and core data center units, which make up about 63% of its revenue, are growing rapidly. Despite CXMT's strong performance, Micron remains a compelling buy, with a current stock price reflecting the industry's overall risk, and investors advised to gradually build their positions.
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