Intel's CEO Just Gave Micron Technology Investors Great News

Investors can sometimes get great news from unexpected places. While investors typically focus on a company's earnings reports and press releases when assessing a stock's potential, it's also worth paying close attention to what others in the industry are saying.

Micron Technology (NASDAQ:MU) is a great example of a company where it's arguably more important to determine what lies ahead amid the memory shortage than anything else; investors know the current results are going to be strong. The big question is: how long is the shortage going to drag on? Management will likely have a rosy forecast, but when others in the industry also have a promising outlook, that can be the confirmation investors need to remain bullish on the stock.

Last week, Micron investors received terrific news from Intel (NASDAQ:INTC) CEO Lip-Bu Tan, who expects the memory shortage to be even worse next year.

Image source: Getty Images.

Memory prices could continue rising

Many CEOs have been complaining about rising memory prices impacting their products. According to Tan, who says he correctly predicted this year's bottleneck, "next year is going to be even worse."

For Micron investors, this is great news, as it means prices may remain elevated and continue rising into next year. That's likely to result in stronger sales and earnings, potentially setting up an even stronger year for Micron in 2027.

Currently, the stock is trading at an incredibly low forward price-to-earnings multiple of less than seven. That's based on analyst expectations and hinges on the assumption that demand will remain insatiable and that Micron's profits will continue to soar. Many investors, however, have remained cautious because demand for memory and storage products has historically been cyclical, with the fear that if a slowdown comes, these types of stocks could crash.

Is Micron's stock a slam-dunk buy right now?

News of the memory shortage potentially getting worse next year is great for Micron investors, but it also isn't exactly a new development. There have been reports that the memory shortage might span multiple years, and thus, this might not have a game-changing impact on the tech stock.

Micron's stock has soared more than 260% this year, yet its valuation still doesn't look expensive given how well the business has been performing. But while it has the potential to rise further due to strong earnings, investors should be careful not to buy and forget about Micron's stock, as things can change quickly in the tech sector. Despite its low valuation, this can still be a risky and volatile holding.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intel and Micron Technology. The Motley Fool has a disclosure policy.