Key Takeaways KLAC shares fell 15.1% after soft fiscal Q3 revenue guidance and rising DRAM, tariff headwinds. Advanced packaging revenues seen up mid-to-high teens in 2026 on strong AI demand. Fiscal 2026 EPS estimate rose 3% in 30 days; core WFE market seen hitting low $120B. KLA Corporation (KLAC) shares dropped 15.1% post second-quarter fiscal 2026 results on Jan. 29. The plunge can be attributed to the company’s not-so-impressive guidance, as well as operational headwinds. KLA now expects third-quarter ...

HP Inc. (NYSE:HPQ) is one of the best affordable tech stocks to buy right now. A Nikkei report on February 5 stated that HP Inc. (NYSE:HPQ) is one of four companies that are actively considering sourcing memory chips from Chinese manufacturers for the first time. According to the report, this is a significant shift in procurement strategy for the world’s leading PC brands, who traditionally rely on American, South Korean, and Taiwanese suppliers for critical components. HP Inc. (HPQ) Balances Procurement ...

Core Business Outlook - Qualcomm reported a 5% year-over-year revenue increase for Q1 fiscal 2026, exceeding expectations, but anticipates a revenue decline in Q2 due to memory chip shortages [1][2] - The smartphone industry is expected to face constraints in availability and pricing of memory chips, particularly DRAM, leading to a projected 1% decline in smartphone unit shipments in 2026 [2][6] Memory Chip Market Dynamics - A significant shortage of DRAM chips is affecting various markets, including smartphones and PCs, as manufacturers shift capacity to high-bandwidth memory (HBM) for AI applications [4][5] - Qualcomm's CEO indicated that the memory shortage has caused smartphone OEMs, especially in China, to reduce chipset inventories, resulting in lower sales for Qualcomm [6][7] Premium Segment Resilience - Despite an overall decline in smartphone shipments, the premium segment is expected to remain resilient, with OEMs likely prioritizing high-end devices [8][10] - IDC forecasts that the total value of smartphone shipments will reach a record high of $579 billion, suggesting that a shift towards higher-end chips could mitigate some impacts of the memory shortage for Qualcomm [10] Long-term Investment Perspective - Qualcomm's stock may face pressure in the short term due to the memory market instability, but a recovery in the smartphone market is anticipated once the memory situation stabilizes [12] - Current analyst estimates suggest Qualcomm stock trades at approximately 12 times forward earnings, which may become more attractive for long-term investors despite potential downward revisions [13]

Micron Technology (NASDAQ: MU) has been one of the hottest stocks on the market in the past year. Shares of the memory specialist jumped an incredible 339% in the past year. This isn't surprising, given its accelerating revenue and earnings growth, driven by robust demand and constrained supply of memory chips. The good news is that Micron stock seems poised to deliver more upside, thanks to the stunning earnings growth that the company is poised to deliver in the future. But what's worth noting is that M ...

Labor Market - Private sector employers added only 22,000 jobs in January, significantly below expectations and a sharp decline from December [2] - The government shutdown delayed the jobs report, indicating a cooling labor market that may influence the Federal Reserve's policy decisions [3] Housing Market - Mortgage demand decreased sharply last week, with loan applications dropping due to adverse weather conditions [4] - Despite a slight week-to-week decline, refinancing activity remains above last year's levels, indicating continued interest in lower borrowing costs [5] Semiconductor Industry - The memory chip sector is experiencing significant challenges, with companies like AMD facing double-digit stock declines amid a broader chip selloff [7] - Intel's CEO indicated that the memory chip shortage is expected to persist for at least two more years, with no relief anticipated until 2028 [8] Corporate Earnings - Amazon is expected to report an EPS of $1.96 on revenue of $211.5 billion, reflecting a 5% increase in EPS and a 13% increase in revenue [11] - The AWS segment is projected to generate $34.9 billion in sales, marking a 21% year-over-year increase [12] Economic Indicators - The delayed JOLTS report is expected to show a continued softening in the job market, with job openings projected to dip to around 7.1 million, marking the second consecutive month of decline [13]

Core Viewpoint - Micron Technology has significantly benefited from the AI boom, showcasing a remarkable growth trajectory since its IPO in 1984, transforming from a small memory tech company to a major player in the industry [1]. Company Performance - Micron Technology went public in 1984, and an initial investment of $1,000 would have grown substantially over the years, reflecting the company's long-term value creation [1][2]. - From the mid-1980s to the mid-1990s, Micron's stock increased over fivefold, driven by the rise of personal computers and successful DRAM chip production, turning the initial investment into approximately $5,700 [3]. - During the late 1990s, the stock surged further due to the Internet boom, with the investment reaching over $50,000 by March 2000 at the peak of the dot-com era [4]. - Following the dot-com crash, Micron's stock faced significant challenges, failing to regain its previous highs for nearly two decades. However, as of January 27, 2026, the original $1,000 investment would be valued at about $414,500 [5]. Valuation and Future Outlook - Every $1 invested in Micron in 1984 has grown to approximately $414 today, indicating strong long-term performance [6]. - Despite the recent rally, Micron's current valuation at about 12 times forward earnings is lower than the tech sector average of around 25, suggesting potential for further upside given the critical role of memory technology in modern applications [6].

Market Overview - The stock market closed mostly lower, with the Dow managing to finish slightly in the green, while the NASDAQ experienced its worst day in several months [1][2][3] - The S&P 500 ended with a minor loss of about 13 basis points, while the Russell 2000 small-cap index was also slightly down [3] Company Performance - Microsoft saw a significant drop, down approximately 10% at its lows, marking its worst performance in several months [4] - Tesla also declined by 3%, while Meta's stock rose by 10%, contributing to a strong performance in the communication services sector [4][5] - SanDisk reported a revenue of $3.03 billion, exceeding expectations of $2.68 billion, and its earnings per share came in at $620, significantly higher than the expected $344 [22][23] - SanDisk's stock has surged over 90% year-to-date, driven by high demand for memory products in the AI sector [24][25] Sector Analysis - The communication services sector reached a record high, while technology was the worst-performing sector, down 1.6%, primarily due to poor performance in software stocks [5][6] - The software industry faced widespread declines, with companies like SAP down 15% and Atlassian down 10% [6][7] - In the semiconductor space, companies like Lamb Research and KLA saw gains of about 3.5%, indicating a mixed performance within the sector [7] Geopolitical Impact on Oil - Crude oil prices rose to their highest levels since September, influenced by President Trump's threats of military action against Iran, which has led to a risk premium in the oil market [11][12] - Analysts noted that the market is not currently pricing in a full-scale conflict but is reacting to operational signals and geopolitical tensions [12][13] Housing Market Insights - US mortgage rates are holding steady at 6.1%, the lowest in three years, but housing affordability remains a challenge due to high home prices [44][45] - The "lock-in effect" is causing homeowners with low-rate mortgages to keep their homes off the market, contributing to tight inventory levels [48][50] - New home listings have increased, but they are still 20% below pre-pandemic levels, indicating a slow recovery in housing supply [50][56] Future Outlook - Analysts expect continued high demand for memory products, particularly in AI infrastructure, but caution against potential oversupply in the future as production ramps up [39][42] - The housing market may see improvements in inventory levels, but significant policy changes at the state and local levels are needed to address long-term supply issues [52][56]

Core Insights - Apple is experiencing pressure on profitability due to rising memory chip prices, which is expected to impact the current quarter more significantly than the previous holiday quarter [1][2] - Demand for the iPhone 17 has surged, particularly in China and India, leading to an increased need for memory chips [3] - Samsung Electronics and SK Hynix, which dominate the DRAM chip market, have warned that the worsening shortage of DRAM chips will affect computer and smartphone manufacturers, leading to margin pressure and potential supply chain disruptions [4] Industry Trends - The shift towards building AI infrastructure has led chipmakers to prioritize high-bandwidth memory (HBM) for AI servers, resulting in a squeeze on conventional DRAM chip supply [5] - Manufacturers are adjusting their product strategies in response to the memory chip price surge, with some adopting more conservative shipment plans and considering adjustments to memory chip specifications [6] - Research firms IDC and Counterpoint predict a decline in global smartphone sales by at least 2% this year, reversing earlier growth forecasts, while the PC market is expected to shrink by at least 4.9% in 2026 [6]

Core Viewpoint - Two leading chipmakers have indicated that computer and smartphone manufacturers will face significant challenges due to a worsening shortage of DRAM chips, which are essential for their products [1] Group 1: Industry Impact - The shortage of DRAM chips is expected to severely affect the production capabilities of computer and smartphone companies [1] - This situation may lead to increased prices for end consumers as manufacturers struggle to secure necessary components [1] Group 2: Company Response - The chipmakers have previously warned about supply chain disruptions, indicating that the current shortage is a continuation of ongoing issues in the semiconductor industry [1] - Companies are likely to implement strategies to mitigate the impact of the shortage, including potential adjustments in production schedules and sourcing [1]

Core Insights - The auto sector is facing potential supply chain disruptions due to the surge in data center construction for artificial intelligence, leading to a shortage of memory chips and significant price increases [1][2] - Analysts warn of material downside risks to global vehicle production, particularly concerning dynamic random-access memory (DRAM) chips, which are essential for both automotive and AI applications [2] - Major DRAM manufacturers are prioritizing the more lucrative data center market over automotive needs, which could exacerbate supply issues for car manufacturers [3] Industry Impact - Automakers and parts manufacturers are reliant on older memory chip technology, but both sectors are affected by a limited supply of silicon wafers, necessitating urgent sourcing strategy adjustments [2] - Companies with a higher exposure to advanced driver-assistance systems and electronic components, such as Visteon Corp. and Aumovio SE, are identified as being at greater risk, with Tesla Inc. and Rivian Automotive Inc. facing more significant challenges compared to Ford Motor Co. and General Motors Co. [4] Historical Context - The semiconductor shortages during the Covid-19 pandemic resulted in millions of vehicles not being produced, highlighting the vulnerability of the automotive sector to supply chain disruptions [5] - Recent production halts by manufacturers like Honda Motor Co. due to issues with chip supplier Nexperia BV further illustrate ongoing challenges in the semiconductor supply chain [5]