Jim Cramer designated Intel Corporation (NASDAQ:INTC) as the "best stock in show" and Micron Technology, Inc. (NASDAQ:MU) as his second top technology pick during the September 17 episode of Mad Money. The recommendation follows significant quarterly results for both semiconductor giants, with Intel reporting a 25% year-over-year revenue increase and Micron posting an 80.4% GAAP operating margin. Cramer cited acute product shortages as the primary driver for his bullish stance, noting that he personally purchased Micron shares. For options traders, the divergence between strong product demand and heavy capital expenditure requirements creates a complex volatility environment heading into the fourth quarter.

Market Context

The broader technology sector saw increased buying interest, which Cramer anticipated in his prior commentary. While Cramer also recommended cybersecurity stocks, specifically adding Okta to the list to address the challenge of identifying rogue agents, the spotlight remains on the memory and logic semiconductor space. The market is currently pricing in persistent supply constraints, particularly in Data Center and AI products, which Intel expects to continue into 2027. This scarcity narrative is supporting valuations for Intel and Micron despite mixed signals from their respective manufacturing segments.

Analysis

Intel's recent financials reveal a sharp recovery in its product economics. In the second quarter, Intel Products generated $4.8 billion in operating income, a substantial increase from $2.7 billion in the same period a year earlier. The Data Center and AI segment was a standout performer, with revenue rising 59% to $6.3 billion and operating income jumping $1.8 billion to $2.5 billion. However, the company's foundry strategy remains a drag on consolidated results. Intel Foundry reported a $2.1 billion operating loss, although this was an improvement from the $3.2 billion loss recorded a year prior. Notably, external revenue for the foundry segment was only $293 million, with the vast majority of its $5.8 billion in revenue coming from intersegment transactions.

Micron's performance underscores the profitability of tight supply conditions. The company's fiscal third-quarter GAAP operating margin surged to 80.4%, up dramatically from 23.3% a year earlier and 67.6% in the prior quarter. Non-GAAP operating margins reached 81.2%, while operating cash flow hit $25.4 billion. Micron stated that DRAM inventories are "very tight and below 120 days." Intel CEO Lip-Bu Tan corroborated the severity of the memory shortage, stating on September 15 that capacity is "very limited" and that memory prices have risen five to seven times. Tan warned that the situation is expected to worsen, with many projects delayed due to an inability to secure sufficient memory.

Key Numbers

- Intel Q2 Total Revenue: $16.1 billion (up 25% year-over-year)

- Intel Data Center and AI Revenue: $6.3 billion (up 59% year-over-year)

- Intel Data Center and AI Operating Income: $2.5 billion (up $1.8 billion year-over-year)

- Intel Foundry Operating Loss: $2.1 billion (improved from $3.2 billion loss a year ago)

- Intel Foundry External Revenue: $293 million (of $5.8 billion total segment revenue)

- Micron Q3 GAAP Operating Margin: 80.4% (up from 23.3% a year ago)

- Micron Q3 Operating Cash Flow: $25.4 billion

- Micron Net Capital Expenditures (Q3): $7.1 billion

- Intel CEO Lip-Bu Tan on Memory Prices: Risen five to seven times

What to Watch

Traders should monitor Intel's ability to reduce foundry losses, with the next quarterly report serving as a critical test of whether the $2.1 billion operating loss trend continues to improve. For Micron, watch for any signs of DRAM inventory levels rising above the current "below 120 days" threshold, which could signal a peak in pricing power. The persistence of the five-to-seven-fold increase in memory prices remains a key catalyst for both stocks, as Intel CEO Lip-Bu Tan has warned that supply constraints are expected to worsen, potentially delaying other projects and sustaining high margins for memory providers.