Why Are Micron Technology (MU) Shares Soaring Today

Max Juang /
2024/06/18 12:09 pm EDT

What Happened:

Shares of memory chips maker Micron (NYSE:MU) jumped 5.9% in the morning session after Bank of America analyst added the company to its US 1 List, noting that it is a "top US memory company." The analyst also raised Micron's price target from $144 to $177. Bank of America explained that "the emerging market for AI features on-device, aka Edge AI ...will slowly but steadily supplement core or data center AI hardware" and "the two most important beneficiaries of Edge AI will be manufacturers of compute and memory chips." After the initial pop the shares cooled down to $154.51, up 4.5% from previous close.

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What is the market telling us:

Micron Technology's shares are somewhat volatile and over the last year have had 9 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The biggest move we wrote about over the last year was 3 months ago, when the stock gained 18.4% on the news that the company reported first-quarter results with revenue and EPS outperforming Wall Street's estimates. The topline outperformance was broad-based across business lines and product types. Notably, Micron called out strong AI server demand amid a more favorable operating environment. 

On the other hand, its inventory levels increased. Looking ahead, its revenue, gross margin, and EPS guidance of $6.6 billion, 25.5%, and $0.17 per share for the next quarter crushed analysts' projections. 

During the earnings release, the company declared a quarterly dividend of $0.115 per share.

Following the results, there was a palpable uplift in sentiments by Wall Street analysts. Notably, Argus Research upgraded the stock's rating from Hold to Buy, citing "rising memory prices, a broad recovery in demand, and the AI-driven demand surge in [the] data center." Overall, this was a fantastic quarter that should have shareholders cheering.

Micron Technology is up 87.8% since the beginning of the year. Investors who bought $1,000 worth of Micron Technology's shares 5 years ago would now be looking at an investment worth $4,509.

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