Even though Micron Technology Inc.’s most recent earnings report caused a lot of excitement, investors weren’t happy with the company’s forecast for flat revenue for the current quarter.
Micron stock (MU, -7.12%) is down 7.4% as of noon Thursday, even though the company’s latest quarterly results were better than expected and showed how demand for artificial intelligence is boosting its business. The stock is likely to drop more than 7.5% in one day, which would be the biggest drop since September 13, 2022.
Even so, Micron bulls had reason to be happy when they saw how high-bandwidth memory, a technology that’s becoming important for AI, is showing up in the company’s results.
Hans Mosesmann, an analyst at Rosenblatt Securities, wrote in a note to clients, “HBM will continue to be sold out through next year. The company expects billions of dollars in sales from the reported $100 million in the May quarter.” “Management still sees over 20% bit share in HBM by 2026, which is amazing since it was almost nothing last year.”
Mosesmann is still optimistic about HBM’s ability to change the memory landscape as a whole, since “the more HBM wafers started, the fewer bits of DRAM are made for other varietals.” That’s important because it could make supply even tighter, which would help prices.
The price he thinks Micron shares will reach is $225.
N. Quinn Bolton of Needham also saw positive signs in the HBM commentary.
“Longer term, we were interested to hear that HBM4 lets you change the base logic die,” he wrote. “This would pretty much lock customers into that custom supply, and it’s a strong argument against the idea that memory is a commodity.”
He thinks Micron shares are a good buy, and after the report, he raised his target price from $120 to $150.
Christopher Danely, an analyst at Citi Research, said that Micron’s outlook seems cautious. He also reiterated his own positive outlook for the stock, which includes a buy rating and a target price of $175. He thinks that Micron’s gross margins could grow in each quarter of next year for a number of different reasons.
“Micron expects strong demand for high-margin dynamic random-access memory products in the server market as well as solid-state drives for the data center,” he wrote. “The improving mix includes the ramp of HBM to several billion in sales in [calendar 2025].” “Micron also expects supply to stay tight through C25 because of slow production growth and wafer loss from HBM,” he said.
Matt Bryson of Wedbush said that Micron’s prediction “didn’t quite meet our more lofty expectations,” but he was happy about the improvement in the basics of the business.
“One of the good things we think about memory is that the industry is being very careful about adding new capacity,” he wrote. “A lot of what Micron says and how they see capital expenditures fits this thesis.”
Bryson thinks Micron’s stock will do well and sets a $170 target price for it.
