This MU Stock Forecast article was written by Milana Papadopoulou – Financial Analyst at I Know First.

Highlights

• Technical analysis suggests a bullish outlook for the MU stock.
• MU has a strong presence in the High Bandwidth Memory Sector.
• Analysts place MU’s target share price at $174 per share. 

Introduction

“Semiconductor” has been a buzzword in the tech and financial industries since OpenAI’s groundbreaking presentation. The keen interest in the hardware that keeps the models “intelligent” is reflected in unprecedented gains by the sector’s firms. The Vanguard and iShares Semiconductor indices have significantly outperformed the S&P 500 in the last year; that is not even considering that many semiconductor companies also have large weights in the index. 

With investors exerting pressure on their fund managers to include “AI-adjacent” stocks in their portfolios, much attention has been turned to manufacturers such as TSMC, Intel and Micron Technologies. As a result, MU stock has soared 109% in the last 12 months. 

Business Description.

Micron designs and manufactures its products and partners with Intel in their joint venture IM Flash Technologies. Its product lineup comprises three semiconductor memory and storage technology categories: DRAM, NAND and NOR. 

DRAM (Dynamic Random Access Memory) semiconductor devices provide high-speed data retrieval with various characteristics. They lose content when power is turned off, so they are most commonly used in the client, cloud servers, enterprise, networking, graphics, industrial and automotive markets.

NOR and NAND are flash memory storage semiconductor technologies based on the NOT OR and NOT AND logic gates. They are used to make SSD chips of different capacities with various performance characteristics. They are used for enterprise, cloud, client, consumer, embedded, automotive, surveillance, automation, home networking and other sectors. 

The largest business division is the Compute and Networking Business Unit. The fastest-growing branch of that unit has been the Cloud Server branch, followed by Networking, driven by 5G infrastructure deployments and data center networking growth.  

Cloud Trends

As previously explored, DRAM sales are the cornerstone of the firm’s income, significantly contributing to its financial stability. Despite a variety of applications, cloud instances lead the share of sales. In 2022, DRAM providers experienced a slump in demand, leading them to take significant losses. However, the situation has reverted. With more companies adopting the cloud to fulfil their computing needs, new data centres are being built worldwide, and existing ones are being forced to increase capacity. 

  This is positive news for MU, as they produce only low-latency, highly reliable DRAM chips suitable for cloud computing. Demand for these chips grew so much in 2024 that the firm announced price increases for the semiconductors. Moreover, despite the price increases, company representatives stated that they had a significant volume of orders and had sold out all the advanced chips they planned to produce until 2025. 

AI trends

Another type of chip powering the recent AI boom is the high-bandwidth memory chip (HBM), which consists of eight DRAM chips stacked on top of another chip and varies depending on end-use. HBM chips have been another significant product in the DRAM category and are responsible for Micron’s high valuation. 

NVIDIA skyrocketed to a 13-digit valuation due to its AI-enabling chips. At the base of it has been the GeForce RTX 40-series GPU, the chip they released in 2022. Its capabilities would be unachievable without Micron’s GDDR6X memory chips. The firms have a strong partnership, with MU supplying the HBM chips and NVIDIA incorporating them into the GPUs. 

NVIDIA’s rivals followed suit, trying to achieve the high-performance NVIDIA GPUs they are famous for. This brings on a continuous stream of orders and a solid trajectory for growth. 

Competition

Although MU has experience and substantial market share, the semiconductor industry is highly competitive. In the firm’s own words, it is experiencing solid competitive pressure from several firms in China and elsewhere. In particular, Kioxia Holdings, Samsung Electronics, SK Hynix and Western Digital Corporation.

The representatives also pointed out the investments made by the Chinese government and various state-owned entities in Yangtze Technologies Co. and ChangXin Memory Technologies. The significant help from the government allows the firms, as mentioned earlier, to offer lower prices for their products and invest more in R&D. 

Moreover, Samsung Electronics has long invested in HBM chips similar to Micron’s. Samsung has stated that it plans to increase its HBM production to 23.1x 2023 figures by 2028. Samsung’s representatives have said that their “ability to offer logic, memory and advanced packaging will help it make rapid progress”.

In addition, the Chinese Cyberspace Administration ordered in May 2023 that information infrastructure firms are prohibited from purchasing chips from American firms. This hinders Micron’s competitive position worldwide and greatly benefits SK Hynix and Samsung. 

Cyclicality

It is worth mentioning that the memory semiconductor industry is highly cyclical. Current projections are optimistic as AI and cloud applications continue to take off and keen investor interest exists. History shows that such upturns tend to reverse sooner rather than later rather sharply. Micron Technology suffered losses during the industry turmoil in 2022. 

The firm beat income projections in Q2 2024 but not by the figures investors expected, which placed temporary downward pressure on the stock. This represents the sentiment of caution expressed by institutions. That is understandable, as despite having a significant market share, the firm is not significantly diversified, unlike some of its competitors.  

MU Forecast: Technical Indicators

Technical analysis of the MU stock is bullish. The stock has been trending upward since the beginning of the year, gaining 60%. The growth has come with a significant increase in volatility, represented by the widening of the Bollinger bands. The stock price, however, is currently towards the lower band, so it is to be expected that it will revert to the mean. 

The three moving averages are also sloping upwards, a bullish signal indicating that the stock will continue growing. Higher interest in the stock has also increased trading volume. 

The Relative Strength Indicator has a value of 46 and has been looming closer to the 30 mark. This indicates that the stock has not been overbought and that the opportunity to buy is present. The Average True Range figure has been increasing, which aligns with the previously made conclusion about increased volatility. However, with high upside potential, it might be worth adding the stock into one’s portfolio if volatility is not an issue. 

MU Forecast: Analyst Consensus

  The analysts are optimistic about the stock, and the consensus is a “BUY” rating. Despite expressed caution, the target price is around $174 per share, which presents a 33% upside potential. The analysts base their assumptions on significant projected growth in revenues and profits. 

Conclusion

Memory technology is the backbone of significant technological developments and will remain vital. Micron Technologies has been at the forefront of innovation and has a considerable market share. With more investors exploring different links in the global AI-adjacent supply chain, it is bound to attract even more interest. Therefore, my recommendation regarding MU is a “Buy”.  

It is worth paying attention that the stock-picking AI of I Know First has a high signal on the one-year market trend forecasts, supporting my position for the MU stock forecast. The light red and light green for the short-term forecasts is mildly bearish and bullish, while the darker green is a strong bullish signal for the one-year forecast.

Past Success with MU Stock Forecast

I Know First has been bullish on the MU stock forecast in the past. On June 30th, 2023 the I Know First algorithm issued a forecast for MU stock price and recommended MU as one of the best Tech Giant stocks to buy. The AI-driven MU stock prediction was successful on a 1-year time horizon, resulting in more than 104.45%.

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Please note-for trading decisions use the most recent forecast.