Here's 1 Incredibly Cheap Semiconductor Stock to Buy Following Micron Technology's Latest Results

Micron Technology (NASDAQ: MU) released its results for fiscal 2024 on Sept. 25. The data released offers a clear indication that the memory chip market is hot thanks to favorable supply/demand dynamics.

Micron reported $7.75 billion in fiscal Q4 revenue, a stunning increase of 93% year over year. Additionally, the company's operating income margin swung to a positive 22.5% from a negative reading of 30.1% in the same quarter last year thanks to the recovery in memory prices. The improvements helped Micron report non-GAAP (generally accepted accounting principles) earnings of $1.18 per share for the quarter, as compared to a loss of $1.07 per share in the year-ago period.

The company's revenue for the entire fiscal year jumped 61% to $25 billion. Its adjusted earnings came in at $1.30 per share, as compared to a loss of $4.45 per share in the prior year period. Even better, analysts expect Micron to sustain this impressive level of growth over the next couple of fiscal years as well.

The growth forecast isn't surprising as the memory market got a terrific boost thanks to the growing interest in all things artificial intelligence (AI). The rapid adoption of this technology created the need for more memory chips across different applications, ranging from data centers to smartphones to vehicles to personal computers (PCs).

Memory manufacturers such as Micron say they plan to spend more money to boost their production capacities. This is good news for Lam Research (NASDAQ: LRCX), a semiconductor equipment supplier that relies on the memory market for a significant chunk of its revenue.

Let's look at the reasons why buying Lam Research stock could turn out to be a smart move following Micron's impressive results.

Increasing memory capex will be a tailwind for Lam Research

Micron management pointed out on the company's latest earnings conference call that its capital expenditures stood at $8.1 billion in fiscal 2024. That was an increase of 16% from the previous fiscal year. The company plans to spend $3.5 billion in capex in the first quarter of fiscal 2025, which points toward a much higher run rate than last year.

For the full year, Micron says that it expects "capex to be around the mid-30s percentage range of revenue." Based on the $38 billion revenue estimate for the company, as seen in the chart earlier, its capex could jump to $13.3 billion in fiscal 2025 (at 35% of the top line). That would be a 64% increase from the preceding year.

Lam Research gets 36% of its revenue from selling memory manufacturing equipment. This explains why the company's outlook for fiscal 2025 (which started in July this year) is much better than its performance last year. Lam Research's fiscal 2024 revenue fell 14% from the previous year to $14.9 billion on account of a glut in the memory market due to weak demand from PCs and smartphones.