Why Is Micron (MU) Stock Rocketing Higher Today

What Happened?

Shares of memory chips maker Micron (NYSE:MU) jumped 8.9% in the morning session after Citi boosted its price target on the stock to $175 from $150, citing strong industry fundamentals ahead of the company's earnings report. 

The firm, which reiterated its 'Buy' rating, anticipates Micron will provide guidance significantly above consensus estimates. This optimism is fueled by an ongoing memory market upturn, characterized by limited production and stronger-than-expected demand, particularly from the data center and AI sectors. Citi's report highlighted that the shortage of memory chips is expected to persist until 2026, with projected demand growth for both DRAM and NAND memory outpacing supply.

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What Is The Market Telling Us

Micron’s shares are very volatile and have had 25 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 1 day ago when the stock gained 4% on the news that the company hit a new 52-week high following an announcement it is ramping up production of its high-bandwidth memory (HBM3E) to meet surging demand from the AI sector. 

This move is driven by strong demand from major AI players like Nvidia and AMD. In response, Micron upgraded its fourth-quarter guidance, citing rising memory prices and momentum in its AI-related products. Analyst sentiment is also positive, with Stifel noting that the market 'under-appreciates the significant change in composition of Micron's datacenter revenue,' which now constitutes the majority of sales. The firm highlighted that this segment is achieving impressive gross margins at or approaching 50%, a factor they believe investors are overlooking. The combination of a guidance upgrade, strong AI demand, and optimistic analyst outlook is fueling investor confidence.

Micron is up 77.2% since the beginning of the year, and at $154.74 per share, has set a new 52-week high. Investors who bought $1,000 worth of Micron’s shares 5 years ago would now be looking at an investment worth $3,357.

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