In one of the biggest turnarounds in recent memory, the chip stock sector mostly shot upward in Monday afternoon’s trading after revelations at three of the biggest memory chip makers. This part of the tech sector has been a concern for some time, and new results say that recovery could finally be in the offing.
The biggest star of Monday’s trading was Micron Technologies (NASDAQ:MU), which blasted up over 8% after Samsung announced plans to cut back “a significant amount” on its memory chip production. That prompted Citigroup analyst Christopher Danely to step in and note that this could be the catalyst that sends the chip sector roaring back. With Samsung cutting back, Danely noted that it would lead to competitors Micron and Hynix also cutting back, thus, prompting a DRAM recovery.
Danely also notes that demand will grow during the cuts; though Samsung didn’t reveal how much it would cut, any cut going into future rising demand should help spark growth in DRAM prices. Several other chip stocks rose on the news; Western Digital (NASDAQ:WDC) was up over 7.8%, while Seagate (NASDAQ:STX) added over 2.8%. AMD (NASDAQ:AMD) notched up over 3%, and one of the very few losers in this story is Taiwan Semiconductor (NASDAQ:TSM). Taiwan Semi lost just over 1.8% in Monday afternoon’s trading.
Interestingly, the lowest upside potential in this batch isn’t Taiwan Semi, which is actually the second highest. The lowest potential goes to AMD. Analyst consensus calls it a Strong Buy, but its average price target of $97.56 gives it just 2.35% upside potential. The highest upside potential goes to Western Digital, which comes with 19.54% upside potential thanks to its average price target of $45.33. Analyst consensus, meanwhile, calls it only a Moderate Buy.