Micron smashed its fiscal Q4 earnings with beats across the board and positive guidance on Tuesday, which should gives bulls more room to run. However, its largest peer in the semiconductor space, Nvidia, could be heading in the opposite direction. Either way, this creates different scenarios for traders to profit.
Prior to the release, the artificial intelligence (AI) theme didn’t show any signs of fizzling, if Nvidia’s last earnings report served as a gauge. However, if traders think Nvidia’s stock may have reached an apex, then they may want to consider Micron as an option to further the rally. Here’s how Micron’s numbers ended up for Q4:
“Micron closed out a record-breaking fiscal year with exceptional Q4 performance, underscoring our leadership in technology, products, and operational execution,” said Sanjay Mehrotra, chairman, president and CEO of Micron Technology.
As AI grows, so will the need for processing power. Thus, semiconductor companies like Micron can benefit from the demand. The largest semiconductor companies will be the industry movers and shakers to watch. Micron occupies the seventh spot currently. That said, it could fly under the radar, as most of the capital markets are still fixated on Nvidia.
In the case of Micron, its revenue drivers aren’t relegated to just chips. Its direct random access memory (DRAM) products are also seeing robust sales.
“As the only US-based memory manufacturer, Micron is uniquely positioned to capitalize on the AI opportunity ahead,” said Mehrotra.
If the market reacts positively to Micron’s earnings, then consider using the Direxion Daily MU Bull 2X (MUU). MUU allows for double exposure, giving traders the opportunity to maximize their profit potential if MU moves towards the upside.
Nvidia shares slid during after hours following its Q2 earnings results and early into the following trading day. If the same happens for MU, traders will want to remain flexible. That said, the Direxion Daily MU Bear 1X (MUD) Shares is an ideal tool to have. MUD allows traders to short MU stock without having to utilize a margin account.
Other companies that could see upside (or potentially short-term downside) from continuing to ride the AI wave include Palantir, Advanced Micro Devices, and Taiwan Semiconductor.
As mentioned, Micron can offer an alternate trading option, especially if the market euphoria surrounding Nvidia is starting to fade. Market analysts are already looking at Nvidia’s incredible rally over the last couple of years and wondering if a major correction is looming due to lofty valuations amid an AI spending spree.
If that’s indeed the case, then traders may want to take the bearish side with the Direxion Daily NVDA Bear 1X Shares (NVDD). Leveraged and inverse single-stock ETFs allow traders to remain flexible in the market regardless of whether the stock they’re targeting heads up or down. This opens the door for profitable plays irrespective of what the stock does.
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