Like any other industry, the memory chip market has its ups and downs.
But right now, all eyes on Wall Street are fixed on Micron Technology Inc., and for good reason.
In the early hours of trading on Thursday, 21 March 2024, Micron’s stock (traded under the symbol MU) shot up by an impressive 17.1%. Investors were excitedly buzzing after the company’s latest financial report surpassed everyone’s expectations.
Micron revealed that it’s reaping the benefits of favorable pricing and supply dynamics, partly fueled by the surge in demand for artificial intelligence servers.
This surge marks Micron’s most robust stock performance since 22 December 2011, when it recorded a remarkable 15.7% increase. If this momentum holds, it could signal a significant milestone for the company’s investors.
Micron isn’t just any memory chip maker; it specializes in high-bandwidth-memory (HBM) products, which have become indispensable in AI computing.
According to Raymond James analyst Srini Pajjuri, HBM represents one of the most potent long-term trends in the industry.
Pajjuri reaffirmed his confidence in Micron by maintaining an “outperform” rating on the company’s shares. In his latest analysis, he even raised his price target from $100 to $130, underscoring his bullish outlook on Micron’s future prospects.
C.J. Muse from Cantor Fitzgerald echoed the positive sentiment surrounding Micron’s performance.
“Expectations were high, and Micron certainly delivered,” he expressed in his analysis.
He emphasized that Micron’s outlook for the upcoming quarter surpasses expectations. He pointed out that even with a more standard tax rate, Micron’s projected annualized earnings could potentially exceed $2.00 per share, a figure far superior to any previous industry speculations.
Moreover, this year, Micron anticipates a tight supply of DRAM and NAND. This scarcity could allow the company to achieve an annualized earnings per share range of $7 to $8 by the end of 2024.
Maintaining his optimistic stance, Muse reiterated his “overweight” rating on Micron’s stock. He raised his price target to $135, surpassing the recent increase to $120 he had just adjusted over the weekend.
Harlan Sur from JPMorgan believes that Micron shares’ momentum is still ongoing. He anticipates continued outperformance throughout 2024 as the market factor in improving revenue, margins, and earnings potential in 2025.
Sur highlighted the strong demand by noting that Micron’s HBM3e product is already sold out for the current year, and most of the 2025 supply has already been allocated.
Maintaining an “overweight” rating, Sur set a new target of $130, up from his previous target of $105.
Harsh Kumar from Piper Sandler also called Micron’s latest results and outlook “stellar.” He shared the company’s confidence in continuing favorable trends throughout 2025, further bolstering the positive outlook for Micron’s future performance.
Kumar summarized, “the combination of tight supply, growing demand, the normalization of excess inventory, and the expansion of HBM die sizes is driving significant improvements in pricing.”
He cautioned that addressing supply constraints typically requires multiple quarters, if not years, suggesting a prolonged period of favorable conditions for Micron.
The company positions itself as a “direct beneficiary” poised to capitalize on the sustained strength expected in both the traditional memory and HBM markets over multiple quarters.
Reflecting his confidence, he raised his price target from $95 to $130 while maintaining an “overweight” rating.
Looking ahead, Micron’s trajectory appears promising, with expectations of sustained growth and profitability extending into 2025.
Investors can anticipate continued outperformance from Micron shares as the company leverages its technological innovations and market positioning to drive shareholder value.
As always, investors should conduct thorough due diligence and consider their investment objectives before making decisions.
Nonetheless, Micron’s recent performance and outlook undoubtedly position it as a compelling investment opportunity in the dynamic semiconductor industry landscape.
