Micron Technology [NASDAQ: MU]: The semiconductor industry was at a huge risk, if the U.S and China had continued with their pre-G20 hard-line trade stances. That’s because, China accounts for roughly 50% of the industry’s sales. In the case of Micron Technology, China accounts for about 57% of its sales. As such, if prospects continue to improve between the U.S and China, this is one of the stocks that could experience significant growth going forward. This is the reason why Goldman Sachs is bullish on it and several other stocks, post-G20. However, it is not just Goldman Sachs that is bullish on Micron. Overall investor sentiment on the semiconductor industry has improved significantly since President Trump eased up on Huawei. On Monday, Micron alongside other semiconductor stocks rallied on the outcome of the meeting that happened between President Trump and President Xi of China. This is a pointer to the fact that, more concrete steps to resolve the trade impasse, could spur growth in this industry.
In the short-term, Micron’s price action points to a continuation of the bullish trend that has lasted for the past week. That’s because, it has broken key resistance at $38.98 on the 100-day MA, an indicator that bulls are in control. In the day, Micron has been forming a series of higher lows. This momentum could see Micron trade in the green just before the holidays. Positive sentiment is already building up in pre-market trading today.
However, the situation is still fragile for the semiconductor industry. That’s because, while there won’t be any new tariffs, the existing ones remain in place. This could make the road bumpy for the industry until the trade negotiations are finalized, and an amicable solution is reached. On top of that, the industry has to contend with oversupply in the Chinese market. These are factors that could play into Micron’s price action in the long run.