Key points
- Micron shares have rallied strongly since last year, with gains of 50% in the last few weeks alone.
- The company is far from taking a break; it looks like it will maintain this pace for the rest of the quarter.
- Several favorable factors are in place to support this development, and investors should be excited.
- 5 stocks we like better than Micron Technology
When it comes to first trimesters, the first trimester has to be one of the best ever. Micron Technology, Inc. NASDAQ:MU. Semiconductor stock had already posted a strong 2023, gaining nearly 70%, but from mid-February to the middle of last week, it gained that much again.
For a time, Micron enjoyed its longest winning streak ever. And while you might think the stock could take a breather now, it appears there’s still plenty of upside potential to be discovered.
Bullish Analyst Comments
Over the past two weeks, more than 20 analysts have given new updates on the stock and every one of them has been positive. Just last week, the Bank of America and Citigroup teams reiterated their buy ratings, with Bank of America giving Micron shares a new price target of $144 and Citi giving them a new price target of $150 .
These moves have already been echoed this week, with KeyCorp and Cantor Fitzgerald both reiterating their bullish stances and strengthening their positions. price targets at $150. Given that Micron closed Tuesday’s session at $122, after briefly surpassing $130 last week, we are looking for at least another 22% upside from current levels. Not bad for a stock that’s up over 100% in the last year, right?
So what exactly are the drivers of all these bullish price actions and positions? And how should those of us on the margins consider getting involved?
AI Tailwinds
Well, for starters, it’s no secret that semiconductor stocks have been leading the market. explosion of artificial intelligence (AI), as chips and semiconductors are key products needed to harness the power of AI.
And even though it’s been almost a year since this tailwind actually manifested itself, the most recent reports suggest that semiconductor demand is only increasing as it remains ahead of what even the most optimistic analysts expected. wait. Part of Citi’s upgrade last week was based on better-than-expected and above-seasonal February chip sales.
It was also highlighted recently that Micron benefited from a rise in factors such as dynamic RAM pricing. As high-bandwidth memory is a critical component of AI products, analysts expect it to continue to play an important role. a key tailwind to Micron’s revenues. As a reminder, Micron is expected to generate around $700 million from this business in 2024, but this could easily reach $3 billion by the end of 2025.
Smoking the competition
There is also the fact that Micron has managed to avoid falling out with China. Competitors Advanced Micro Devices and Intel Two have struggled to get the green light to sell in this market, which has spooked investors and started to become a serious handbrake to any stock price momentum. Case in point: Consider the 50% that Micron has gained since mid-February, compared to AMD’s -4% decline and Intel’s -13% decline.
Even against a much larger competitor, NVIDIA Corp., Micron is overwhelming. NVIDIA, long considered one of the best semiconductors to own and the one with the most potential, is up just 18% since mid-February.
While it’s true that NVIDIA easily outperforms Micron when the calendar is pushed back to include 2023 and earlier, this recent underperformance against a key peer suggests that NVIDIA investors believe the company has made enough gains for now. At the same time, it gives the impression that Micron investors are in catch-up mode, meaning that Micron will likely continue to be viewed as a hot stock for the foreseeable future.
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