Micron report will open semiconductor sector earnings season today 🔌

Micron Technology (MU.US) one of the leading semiconductor manufacturers in the US will release its results after the close of the Wall Street session. Analysts will assess the impact of the reduction of business in China caused by the US-China 'trade war'. The company has recently benefited from positive sentiment around the chip industry as a whole, underpinned by the AI trend and the demand for data center computing power that follows it. The stock has gained more than 35% since the beginning of the year.

Estimated revenue: $3.87 vs. $3.7 billion in the previous quarter (Bloomberg)
Estimated loss per share: $1.10 vs. $1.59 in the previous quarter (Bloomberg)
Estimated operating expenses: $842 million vs. $898 million in the previous quarter (Bloomberg)

• Citigroup analysts expect another weak quarter and decline pointing to the overall weakness of Micron's leading product, DRAM chips, and a ban in China. Raymond James, on the other hand, clearly disagrees with Citi's observation - the analysis points to the strong fundamentals of the long-term demand cycle for DRAM and expect higher demand for the chips in the face of their insufficient supply, with the likely short-term negative impact of the ban on sales in China.
• Analysts, however, do not rule out a decline in margins although they stress that the memory chip distributors' stocks have been normalizing since this quarter and the memory market may be past its worst. Bloomberg Intelligence is concerned that the company may be a 'marauder' against its competitors in the face of China's negative impact. The company's earnings per share (loss) has beaten forecasts in 10 of the last 12 quarters.

China's ban under the microscope of Wall Street

• China's Cyberspace Administration (CAC) in March announced its intention to investigate Micron products in the Chinese market - citing protection of the strategic infrastructure supply chain as the reason. The Chinese government indicated that the company's products posed a threat to national security. The market perceived this as a result of ongoing tensions between Washington and Beijing.
• Micron has since conveyed how the ban from China could have a negative impact. It said that about 50% of the revenue of divisions based in China and Hong Kong (about 25% of total revenue) is now at risk. According to Goldman Sachs, this could cause Wall Street to re-evaluate the company's entire business model after the results - if there are worrying signs.

Micron (MU.US) shares, H4 interval. The price respected the SMA200 support (red line) during the last correction, but potentially a below-expectation report could indicate a drop below $63, which could lead to a test of the 61.8 Fibonacci retracement of the December 2022 upward wave, at $58 per share. We can find the nearest resistance at $68 (38.2 Fibo retrecamenet zone). Source: xStation5