Why Is Micron (MU) Stock Soaring Today

What Happened?

Shares of memory chips maker Micron (NYSE:MU) jumped 5.9% in the afternoon session after analysts at multiple firms, including Barclays, Stifel, and TD Cowen, raised their price targets on the stock, citing strong demand for its AI-related memory chips. 

Barclays increased its price target to $450, while Stifel lifted its target to $360, and TD Cowen also set a new target of $450. The optimism was fueled by Micron's strong performance, as its recent earnings report showed that sales grew by more than 50% from the year-ago period, with its cloud memory division revenue nearly doubling due to the AI boom. Analysts pointed to a supply-constrained market for memory chips, especially high-bandwidth memory (HBM) used for AI, which was expected to last for several years. The company also announced a letter of intent to purchase a chip fabrication plant in Taiwan, a move seen as helping it meet the surging demand.

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What Is The Market Telling Us

Micron’s shares are extremely volatile and have had 40 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 6 days ago when the stock gained 3.1% on the news that several analysts issued positive ratings and price target increases, citing surging demand for the company's memory chips used in artificial intelligence. The optimism was fueled by reports that Micron's High-Bandwidth Memory (HBM), a key component for powering AI processors, was sold out through 2026. This intense demand prompted specific actions from analysts. For instance, RBC Capital initiated coverage on the stock with an 'Outperform' rating and set a price target of $425. Other analysts also grew more bullish, with KeyBanc and Bank of America raising their price targets. The consensus was that the current memory chip cycle would be “stronger for longer” than previous ones, largely due to the sustained growth in AI.

Micron is up 21.8% since the beginning of the year, and at $384.23 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 $4,520.

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