As Micron Technology prepares to release its quarterly results, a wave of analyst optimism is building, starkly contrasting with recent pressure on the stock. Despite a sector-wide selloff, several major financial institutions have reaffirmed strong buy ratings, projecting share prices significantly above current trading levels.
Analyst Conviction Defies Sector Weakness
The broader technology sector has faced headwinds, with Micron’s shares feeling the impact. Disappointing revenue figures from Oracle sparked concerns about softening software demand, a sentiment that spilled over into the semiconductor space and triggered profit-taking. Even the muted market response to Broadcom’s solid results indicates that the bar for AI-related stocks remains exceptionally high at present.
However, the prevailing view on Wall Street is one of confidence. Analysts at TD Cowen have explicitly advised investors to prepare for the company to exceed expectations. This bullish stance is echoed by UBS and Citi, with the latter setting a price target as high as $300. The consensus among experts suggests the market is underestimating the durability of the current memory chip cycle.
Should investors sell immediately? Or is it worth buying Micron?
Supply Constraints Underpin Demand Story
A key pillar of the bullish thesis is the structural supply-demand dynamic. Unlike in the software industry, hardware supply is the constraining factor. Micron has confirmed that its entire production of High Bandwidth Memory (HBM) chips—essential components for AI servers—is fully sold out for both 2024 and 2025.
Valuation and Upcoming Catalyst
Even after an impressive rally of approximately 156% year-to-date, observers argue that Micron’s valuation remains attractive. Rapidly rising earnings estimates have actually caused the price-to-earnings ratio to contract. The shares are currently seeking stabilization around €218.15.
All attention now turns to Wednesday, December 17th. The upcoming earnings report will reveal whether the company can meet elevated expectations. Analysts are forecasting a substantial jump in profit and are hopeful for forward guidance that surpasses consensus estimates. A strong performance could quickly narrow the current gap between the stock price and analyst targets.
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