What Happened?
Shares of memory chips maker Micron (NYSE: MU) jumped 4% in the morning session after the company hit a new 52-week high following an announcement it is ramping up production of its high-bandwidth memory (HBM3E) to meet surging demand from the AI sector.
This move is driven by strong demand from major AI players like Nvidia and AMD. In response, Micron upgraded its fourth-quarter guidance, citing rising memory prices and momentum in its AI-related products. Analyst sentiment is also positive, with Stifel noting that the market 'under-appreciates the significant change in composition of Micron's datacenter revenue,' which now constitutes the majority of sales. The firm highlighted that this segment is achieving impressive gross margins at or approaching 50%, a factor they believe investors are overlooking. The combination of a guidance upgrade, strong AI demand, and optimistic analyst outlook is fueling investor confidence.
After the initial pop the shares cooled down to $141.46, up 4.6% from previous close.
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What Is The Market Telling Us
Micron’s shares are very volatile and have had 25 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was about 21 hours ago when the stock gained 3.1% on the news that it received a positive outlook from Stifel and a price target increase from GF Securities, fueled by optimism around its data center business.
Stifel's analysts noted that the market "under-appreciates the significant change in composition of Micron's datacenter revenue," which now accounts for the majority of sales with gross margins approaching 50%. The firm also expressed a bullish view on memory pricing through the end of the year. Adding to the positive sentiment, GF Securities raised its price target on the stock to $138 from $116. This optimism is tied to Micron's key role in the expanding AI and data center markets. Further speculation suggested the company could be a potential buyout candidate due to its command of high-bandwidth memory (HBM) and its strategic position as a U.S.-based memory manufacturer.
Micron is up 62% since the beginning of the year, and at $141.46 per share, has set a new 52-week high. Investors who bought $1,000 worth of Micron’s shares 5 years ago would now be looking at an investment worth $3,153.
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