Chipmaker Micron Technology Inc. is poised to deliver a crucial earnings report, with investors eagerly anticipating guidance on demand for AI-related products. Despite recent weakness in the stock, analysts expect strong growth driven by its high-bandwidth memory chips used in artificial intelligence data processing. A positive commentary on AI demand could revitalize the AI chip trade, which has stalled following mixed reports from peers Broadcom Inc. and Nvidia Corp.
Micron’s shares have underperformed this year, dropping nearly 40% from their June peak, making them potentially one of the biggest bargains in the sector. However, the company faces challenges in increasing production of its new memory chips and weakness in non-AI businesses, including personal computers and smartphones.
Analysts predict Micron shares will rise over 50% in the next 12 months, making it the highest projected return among chipmakers. The company’s forward earnings ratio of around 10 times makes it the cheapest component of the Philadelphia Stock Exchange Semiconductor Index.
While some investors remain skeptical, others see room for optimism. “The worst is behind it, and the AI theme creates the potential for outperformance over the next several quarters,” said Daniel Morgan, senior portfolio manager at Synovus Trust. “If Micron can confirm there’s something tangible behind the excitement, that will lift the whole AI space.”
Options market data suggests growing bullishness around Micron, with near-term bullish positions dwarfing bearish ones. A positive report could take the stock past $100, while a bearish signal would be a drop below recent support near $86.
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