News and analysis

Finita la commedia. Shares of Micron Technology could no longer remain mired at their untypical double-digit price bottom where the stock landed somehow in August. I told you before, this mostly happened because of simple misunderstanding. Micron earnings in the last two quarters were strong and logically convincing, nominally exceeding consensus estimates both in the revenue and profit lines. For example, the Wall Street analysts’ pool "officially" expected Q2 EPS of $0.48 on $6.66 billion of quarterly sales vs $0.42 per share on $5.82 billions in Q1, with only about $4 billion per quarter being available on average in 2023. The actual Q2 numbers came out at $0.62 per share (+29% above average forecasts in terms of corporate profit) on $6.81 billion of revenue. However, the crowd was hungry for more. Micron's own sales projection at $7,6 billion, plus or minus $0.2 million, only added arguments to market's disappointment in mid-summer, as greedy investors were betting on a much higher update for business performance indicators of a major NVIDIA's partner in production of DRAM for graphic processing units and Blackwell AI chips.

People often do not appreciate good things here and now, cherishing hopes for promises of much better progress in the future. However, the underestimation of Micron seems to be coming to an end. The company's share price jumped by more than 13% in after-hours trading on Wednesday to retest last month's important resistance area above $108 per share. The point is that Micron's CEO team notably updated its forecasts this night by saying he now expects the first quarter's sales at a much higher range from $8.50 billion to $8.90 billion, vs also rising consensus estimates of $8.28 billion. Growing memory chips demand is cited as a reason behind upbeat expectations. The company's inner forecast for adjusted EPS lies in a range of $1.74, give or take $0.08 vs average analyst estimates for $1.58. The latest quarterly results topped analyst estimates as well, after adjusted earnings for the last three months came out at $1.18 per share on revenue of $7.75 billion, due to "robust AI demand drove a strong ramp of our data centre DRAM products and our industry-leading high bandwidth memory (HBM)", compared to $1.11 a share on revenue of $7.65 billion in preliminary consensus numbers. By the way, Micron Technology is one of the only three providers of HBM chips, along with South Korea's SK Hynix and Samsung, which are needed to power generative AI technology. Micron's HBM chips were fully sold out for the 2024 and 2025 calendar years.

Based on the current fundamental and technical bullish momentum, I would expect a step-by-step recovery of Micron stock to initial price targets between $130 and $140 (meaning another 20%-30% growth) within the next three to six months, with a potential of climbing at a $160 hill, where Micron's all-time highs were detected in mid-June 2024.

Harmony (ONE) is up by 7.8% this week, trading at $0.0150, outpacing the broader market where Bitcoin (BTC) has gained just 1.4% to reach $63,600. Harmony's price has surged by 28.0% in September, now approaching a key resistance level at $0.0150. This marks the second attempt to break through this level after a failed effort in late August, which saw the token retreat to a support level at $0.0100.

This time, Harmony appears to have a stronger chance of surpassing the resistance, with momentum supported by positive sentiment in the crypto market and the rising prices of Bitcoin. If successful, Harmony could target its next upside level at $0.0200.

As a proof of investors' hopes in a travel industry's better future, the share price of Booking Holdings Inc. updated its all-time high at $4177.. Its rival AirBnb in the segment of longer-term rental and experience business was suffering from lower number of stays in its own forecast estimates in early August, now struggling to recover from a painful price drop that time. Many expect consumer spending revival on lightweight borrowing costs not only in the West but also in China and some other Asian countries, and so competitors contributed to a remarkable Booking.com progress. However, the largest operator of travel aggregators and metasearch engines is always marching one or two steps ahead of them.

Among other bullish drivers, a promising partnership with PolyAI, a pioneer company in voice solutions based on artificial intelligence features for customer service should be noted. OpenTable, which is an online restaurant-reservation app and part of Booking Holdings $140 billion empire for nearly ten years, expanded to cover more than 60,000 eating places in more than 80 countries to fill 1.7 billion seats a year. This allows city residents and travellers to enable and book the perfect restaurant for every possible occasion. And now their life would become even easier or more comfortable, while OpenTable is getting a good opportunity to collect higher gross proceeds because PolyAI and OpenTable just announced their relationships on September 23. Good news unsurprisingly boosted the market value of BKNG literally the next Wall Street morning.

The state-of-the-art technology of a guest-led voice assistant to choose excellent locations for the particular day, time and purpose also helps location owners to answer various questions, gain visibility in customer trends, deliver on-brand experiences and take reservations, of course, saving a lot of staff time and material resources. This integration of OpenTable with PolyAI's will help restaurateurs to face growing cost and tax challenges while also providing their hospitality even off premise.

In the latest survey conducted by the National Restaurant Association, 62% of dinner places admitted they did not have enough employees to support existing demand. Restaurant chains also said they might routinely miss between 30% to 60% of phone calls to their front of house, according to PolyAI investigation, including the calls outside of normal operating hours. Now most of them would not miss revenue opportunities. Built-in language technologies are also important. PolyAI said its smart automation solutions provide numerous iterations of voice assistants to cater to the unique needs of multi-location and multi-brand portfolios for large diners' chains.

For Q2 2024, Booking Holdings reported a 7% YoY increase in both room nights and revenue, with its stock value exceeding a 35% increase for the last 12 months. An additional growth segment is unlikely to affect the next earnings, which is scheduled for October 30, but in a year or so, it may well improve the overall financial pattern, which helps to maintain the optimistic mood for three to four reporting periods ahead. The next target price area is supposedly located at $4,500 per share.

A fairly expected slide of business activity indications in the Euro area this Monday only temporarily upset the booming trend on EURUSD relaunched from the recent correction lows around 1.10 (on Sept 11), and now aiming to reset annual highs. Even a usually more healthy services PMI (purchasing managers' index) fell from 52.9 to 50.5, notably below all forecasts in the Reuters poll which predicted only a modest decline to 52.1 on average. Manufacturing PMI dropped to 44.8 points, being just a few steps from approaching a post-pandemic dip once again, led by a deepening decline in German and French plants. It was a kind of returning into severe reality after a short-lived Olympics boost in August. However, markets don't care much about economic matters, as the speculative crowd is much more interested in interest rates differences.

Although the EU data could suppose more policy easing by the European Central Bank (ECB) to make the Euro currency weaker, and the ECB was the first large central bank to cut rates by a small 0.25% in June and then by larger 0.5% in September, most bets are still considering the US Federal Reserve as a ringleader of all global dovish flapping in monetary policy. FedWatch tools show a nearly 50% probability of a 0.75% additional total rate cut in November and December, while 33% more believe in a 1% rate cut in two doses altogether.

U.S. consumer confidence reading on Tuesday gave a warning, as the Conference Board reported this key indicator of potential future spending at 98.7 vs the forecasted number of 103.9, with the previous indication was at 105.6. Potentially decreased consumer spending is a bad driver for the overall economic performance, yet this could be a solid argument for more softening moves by the Fed. Good for stock indices, but the same story may grab the US Dollar index by the throat to place it under the 100.0 water line to sink it there. Market feels that no other currency would undergo reputation losses and suffer as much as the Greenback from further cutting interest rates too fast.

This is the actual reason why gold futures are aiming already at $2,700 to $2,800 at least, the British Pound is approaching 1.35 for the first time since early 2022. The British Pound is moving up more easily due to the refusal of the Bank of England to lower borrowing costs this month to follow the example of the ECB and the Fed. And even the Canadian Dollar showed its fastest daily growth for the last 10 months on September 24, despite three small interest rate cuts since the beginning of summer. Only the Yen is staying away from the common action, as the Bank of Japan disappointed currency traders' audience by refraining from raising its record high but still very low 0.25% interest rate. Paradoxically, and along with the Japanese Yen, the US Dollar now transforms into another sweet object of carry trade speculations.

As a result, the EURUSD is hardly going to stop at testing 1.13 soon, as markets may rather see a high potential of retesting 1.1495 (February 2022 high) after so quickly entering into the taste of trying its teeth on nearest technical resistance areas. Moreover, 1.15 is seemingly a natural border of a middle range for the pair, if we look at the charts for 2016-2017 and for the very beginning of the pandemic volatility in 2020, while the higher strong resistance lies only at 1.2350.