CFRA's Angelo Zino weighs in on Micron Q2 results

Well, let’s get back to Micron. In the meantime, those shares are jumping in overtime after posting on the back of a strong Q2 report. Joining us now is Angelo Zeno from CFRA. Angelo, it’s great to have you on. Now it seems like they’ve posted profits, adjusted EPS, positive EPS, which the Street was not expecting gross margins in terms of the forecast above expectations and it also looks like the guidance is above expectations. Walk me through it. Yes, you’re absolutely right. So you know, I’d say in terms of profitability, they got there a quarter sooner than everyone anticipated. And I, you know, I think really on the gross margin side of things that’s that’s where we kind of get most excited about posting a gross margin of 20% for this quarter relative to our expectation about 14%. And when you kind of look at the May quarter, about 2026 1/2 percent or something and we were looking for closer to 22%. And I think a lot of it has to do with strength on the pricing side of things. And specifically on the pricing side of things, there is a, we think a favorable mix going on in terms of kind of more DRAM on, on the data center side of things, specifically high bandwidth memory, which is what everyone I think is interested about. But when you kind of look at some of the commentary that they provided at least in in terms of you know the the initial things I saw, I saw was that they are largely or they are sold out for their high bandwidth memory capacity for the rest of 2024 and largely allocated in 2025. So we think that’s a big deal out there. If there is potentially a a shift or change in perception of Micron here in terms of maybe being more of a commodity type company towards one of having this secular growth opportunity out there, it’s going to be on that high high bandwidth memory side of things. Given the the attachment to AI there something to watch here certainly with a call getting underway. I’m going to ask you about Intel too because we know Intel’s making $100 billion worth of investments across four different sites in the US How much did this does this chips act funding and the and the loan contingencies attached to it as well? How much does this matter for Intel? Is it meaningful for investors to get, I guess even more behind the stock now? So it matters in the sense that hey, it’s going to help, you know, meet or fund, you know, future capital spending needs. You pointed to the 8 1/2 billion and they spent north of 20 billion in each of the last two years. We expect them to spend north of 20 billion this year as well as in each of the next two years out there. Does it matter out there for investors? Not necessarily. I mean our view was that we’re going to get about 8 to 10 billion here. So that 8 1/2 billion kind of is in line with our expectation. But as you kind of look ahead, I mean this is still kind of a long term timeframe out there before the stock really starts to work because of all of the capital intensive needs for this company. So as a result, the opportunity cost holding this name right now relative to other semiconductor names just doesn’t make sense to us, which is why we continue to have a whole recommendation on Intel in favor the other names out there like an NVIDIA, AMD, Micron for instance.