What Happened?
Shares of memory chips maker Micron (NYSE:MU) jumped 2.8% in the morning session after Morgan Stanley upgraded the stock to Overweight from Equal Weight and raised its price target.
The investment bank lifted its price target on the shares to $220 from a previous $160. The upgrade was driven by the belief that momentum in core DRAM, a type of memory chip, continued to exceed expectations. Analysts at the firm anticipated multiple quarters of double-digit price increases for Micron's products, which they believed would substantially boost earnings. This positive forecast also helped to alleviate concerns regarding specialty high-bandwidth memory used for artificial intelligence (AI) applications, reflecting growing confidence in Micron's pricing power and demand outlook.
After the initial pop the shares cooled down to $194.55, up 3.6% from previous close.
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What Is The Market Telling Us
Micron’s shares are very volatile and have had 27 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 17 days ago when the stock dropped 4.9% as reports surfaced that competitor Samsung had its high-bandwidth memory (HBM3E) qualified by key customer NVIDIA, sparking concerns about increased competition and potential pricing pressure.
A research note from Wells Fargo highlighted the development, which was detailed in a Korean Electronic Daily report, calling it an "incremental negative for HBM pricing." High-Bandwidth Memory is a critical component for the powerful chips used in artificial intelligence (AI). The news hit a nerve as other reports suggested Micron may be struggling to meet NVIDIA's stricter standards for the next generation of memory, HBM4, a situation from which Samsung could benefit.
Micron is up 123% since the beginning of the year, and at $194.55 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 $4,111.
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