Memory specialist Micron has been on a tear this year, with shares more than tripling. Micron jumped nearly 4% today to fresh 52-week highs, thanks to reports that DRAM pricing is expected to continue rising into next year. DRAM spot prices are up, which also leads to DRAM contract prices trending higher in anticipation. The price spike caused by the SK Hynix fire a couple months ago has continued.
Even though memory is generally a commoditized business, Micron has gained considerable momentum in recent months, and is enjoying nice tailwinds. The company closed its acquisition of Elpida earlier this year, where it acquired capacity, and will likely generate cost-saving synergies through economies of scale. Micron will need to rely on operating efficiency to generate sustainable profits in the long term, since its businesses earn relatively low margins. The DRAM segment operates at 4% margins, while the NAND business has a 7% operating margin.
In this segment of Tech Teardown, Erin Kennedy discusses Micron's great year with Evan Niu, CFA, our tech and telecom bureau chief.
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The article Why Micron Jumped 4% Today originally appeared on Fool.com.Erin Kennedy has no position in any stocks mentioned. Evan Niu, CFA, has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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