Micron Technology Inc., (NASDAQ:MU), has seen its stock price plummet by nearly 40% since mid-June. This is despite the fact that it was a major beneficiary of artificial intelligence, which boosted its profits and revenue in 2024.
The semiconductor industry has been impacted by a number of challenges. These include fears about an impending economic downturn and possible trade restrictions with China.
As Micron prepares its financial results for its fourth quarter on 25 September, there are many indicators that the memory chips maker could overcome these challenges and see its stock price rise.
Micron Stock is poised for growth
In June, Micron predicted a sequential increase in revenue of 12% and aimed for $7.6 Billion in its fourth quarter.
Data from TrendForce in Taiwan, a leading market research provider, suggests that Micron’s forecast for DRAM growth may be exceeded.
Micron’s earnings could be further boosted by the expected sequential increase of 5% to 10% in NAND prices.
Analysts expect Micron to report earnings of 97c per share this quarter. This is a significant turnaround compared to a loss per share of $1.21 during the same time period last year.
A strong earnings report may attract income investors. This is especially true since Micron offers a current dividend yield of 0.49%.
Some analysts have even suggested that Micron could be a better AI investment than Nvidia.
Micron shares are trading at a discount
Micron shares currently trade at a forward P/E ratio of only 10, making them a very attractive option, given the company’s rapid growth, driven by AI tailwinds.
According to Fortune Business Insights, the global memory market will reach $360 billion at the end of this decade, up from $136 in 2022.
Harlan Sur, JPMorgan analyst, recommends Micron shares for investment before the earnings report because of their substantial growth potential.
He believes that AI driven server demand could push MU stock up to $180. This would represent a nearly 100% increase over current levels.
These catalysts could also improve Micron’s outlook.
The company’s HBM3E capability, for example, is sold out until 2025. However, significant growth is expected in fiscal 2025.
Profitability is expected to increase due to the surge in AI demand.
Wall Street is optimistic regarding Micron’s prospects. They expect the Nasdaq listed firm to guide for about $8.55 billion of revenue for its first fiscal quarter.
Micron’s ability adapt and thrive within a competitive environment may be a key to its continued success as the semiconductor industry evolves.
This post Micron Q4 Earnings Preview: Why MU Stock Could Rally This Week may be modified as new information unfolds.
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