Micron Technology stock experienced a significant rally on Monday morning, with shares jumping by as much as 5%. Although the initial surge slightly faded as the morning progressed, the stock was still up by 1.2% by late morning.
The catalyst behind this surge was a bullish outlook from KeyBanc analyst John Vinh, who maintained an overweight rating on the stock and raised the price target to $150 from $135. This suggests a potential upside of around 21%, considering the stock’s impressive 115% gains over the past year.
Vinh’s optimism stems from a recent supply chain review, where Micron’s HBM3E chip reportedly offered superior thermal and power performance compared to competitors. He believes this positions Micron well to exceed $1 billion in revenue from HBM sales by 2024.
The positive impact of artificial intelligence (AI) on Micron’s results is becoming more evident, with the company reporting a 58% year-over-year increase in revenue for the fiscal 2024 second quarter. The upcoming fiscal Q3 is expected to see revenue surge by 76% year over year to $6.6 billion, further highlighting the strong demand for Micron’s memory and storage solutions in the AI space.
Despite the recent surge in Micron’s share price, the stock still trades at around 4 times next year’s expected sales, only slightly above the S&P 500’s forward sales multiple of 3. With robust demand for AI technologies expected to continue driving growth, Micron remains well-positioned for further success in the coming years.
