Micron’s strong performance in the memory chip industry has led to significant growth over the past year, with shares nearly doubling in value. The demand for high-bandwidth memory in AI servers is expected to further boost the company’s growth potential.
Baird analysts believe that Micron has significant upside potential, with analyst Tristan Gerra upgrading the stock from neutral to outperform and setting a price target of $150. This represents a 25% increase from the current share price and could lead to further gains for investors.
The growth of artificial intelligence is a key catalyst for Micron’s success, as data centers invest heavily in increasing data capacity, network speed, and processing power to meet the demands of AI. Micron’s revenue increased by 57% year over year in the fiscal 2024 second quarter due to this trend.
Another factor driving Micron’s growth is the increase in selling prices resulting from limited availability of memory chips. Baird’s research indicates that pricing trends for DRAM, which accounts for a significant portion of Micron’s revenue, are stronger than expected.
Micron management is optimistic about the company’s future performance, with revenue projected to reach approximately $6.6 billion in the current quarter, up from $3.8 billion in the year-ago period. Profitability is also expected to improve substantially.
Baird forecasts earnings to reach $10.05 per share by fiscal 2026 if the stock reaches its price target of $150. If this happens, it would be trading at a forward P/E ratio of 15 based on that estimate, consistent with Micron’s historical average. Baird projects that Micron’s stock could continue to perform well over the next 12 to 18 months.
Overall, Micron appears to be well-positioned for continued growth and success due to its strong position within the memory chip industry and growing demand for high-bandwidth memory in AI servers.
Despite trading near $120 with a 52-week high of $130, there are still opportunities for further gains due to Baird analyst Tristan Gerra’s upgrade from neutral to outperform and setting a price target of $150.