On Monday's early trading session, Micron Technology's stock witnessed a rally.
Micron Technology's shares soared early Monday, climbing as much as 5% before settling at a 1.2% gain by 11:36 a.m. ET. The boost came following a vote of confidence from Wall Street analyst John Vinh of KeyBanc. Vinh not only maintained his overweight (buy) rating on the stock but also upped his price target to an ambitious $150 from $135. This shift suggests Micron could see a potential increase of around 21% based on its Friday closing price, and an additional 115% gain in the past year.
Vinh's renewed optimism stemmed from a thorough supply chain review. It revealed that Micron's recently introduced HBM3E (High Bandwidth Memory 3E) chip outperformed competitors in terms of thermal and power efficiency, placing Micron in the "pole position" to surpass $1 billion in HBM revenue by 2024's end. Vinh acknowledges that Nvidia, a key player in AI and high-performance computing (HPC), has tapped Micron's HBM3E for its Tensor Core GPUs.
This strategic collaboration aims to empower generative AI and HPC workloads using high-capacity memory. Micron's HBM3E chips, currently sold out for 2024, have already secured much of the 2025 supply, indicating substantial demand. The benefits of AI have manifested in Micron's financial performance, with Q2 2024 revenue jumping 58% year-over-year and sequentially, setting the stage for Q3 2025 forecasts of a whopping 76% year-over-year revenue surge.
Despite the growth and positive sentiment, Micron's stock valuation remains relatively affordable at a multiple of 4 times projected 2025 sales – a slight premium to the S&P 500's comparable multiple of 3, but still suggesting that strong demand for AI-driven memory and storage solutions is yet to be fully priced in.
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Micron's financially promising future in the AI and high-performance computing (HPC) sectors is attracting investors, as analyst John Vinh highlighted the potential for Micron to generate over $1 billion in revenue from its HBM3E chip by 2024's end. This could potentially lead to significant gains in investing in Micron Technology's shares, considering the current relatively affordable stock valuation.