Micron Technology (MU +0.97%) is the big name in tech these days. Its numbers have been out of this world, with both sales and profits rising at exceptionally high rates. Demand is high for its memory and storage products, while supply is limited, creating a terrific scenario for the company to be able to raise prices and for demand to remain robust.
This year, the stock has more than tripled in value, as it's been one of the hottest buys on the market. But could that change? In July, there's another big-name memory stock that could list on a top U.S. exchange, and for investors, it may be a more intriguing option to consider.
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SK Hynix, one of the largest memory chipmakers in the world, plans to issue American depositary receipts on the Nasdaq exchange soon. They could begin trading by July 10 and would likely offer significant competition to Micron. The South Korean company is publicly traded, but by being on the Nasdaq, that would inevitably draw more attention to the tech stock and make it more accessible to the average North American investor.
The company, like Micron, has a valuation of more than $1 trillion. And with a dominant position in the high-bandwidth memory market, where it holds around 60% market share, it may lure many investors away from Micron's stock, making it suddenly less desirable for growth investors.
Anytime a stock that's up around 800% in just the past year, like Micron is, there's going to be some risk of a correction on the horizon. While the company has been doing well and generating strong numbers, it also may not take much for investors to second-guess whether it's still a good buy at significantly elevated levels.
But, at the same time, investors who may have wanted exposure to SK Hynix could have bought the stock by now. While it may have taken a bit more effort to do so, this is not the same as a brand-new stock suddenly becoming available. There may be some investors who pivot to SK Hynix over Micron once it trades on the Nasdaq, but I would be surprised if there were a sudden, massive exodus.
Micron's stock may fall after July 10, but I don't anticipate a steep sell-off. Both stocks are likely to do well due to ongoing supply shortages, but that dependency also makes them both a bit risky to hang on to over the long haul. Growth investors should tread carefully, regardless of which stock they choose to buy.
David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.
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A key rival plans to list its shares on a major U.S. exchange in the very near future.
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