Another AI play is getting buzz before its earnings this week

Don’t sleep on Micron Technology this week. The semiconductor maker is slated to report fiscal second-quarter results after the bell Wednesday. The report comes as sentiment around AI remains high. Nvidia shares added to their 2024 rally on Monday as the company kicked off its GTC Conference. Other AI plays such as Alphabet and Super Micro Computer were also higher. Analysts hope this report will serve as a stepping stone to stronger earnings going forward, underpinned by increased shipments of the company’s High Bandwidth Memory 3E memory chip to Nvidia — which will be used in conjunction with AI technology. Micron touts HBM3E as an essential component to move the needle forward on AI advancement, and so far analysts agree. “Micron remains our top cyclical pick in the current memory cycle, which we believe will be one of the biggest in history, consistent with our Mother of All Cycles (MOAC) secular view,” Rosenblatt analyst Hans Mosesmann said Monday. Mosesmann’s buy rating and $140 per share price target represents 50% upside from Friday’s close. MU YTD mountain Micron Technology stock. “A beat and raise is widely expected and HBM remains the centerpiece of attention,” TD Cowen analyst Krish Sankar said in a March 14 note. “Our field work is encouraging on MU’s market share in HBM3E with estimates of 25%+ next year up from 10-15% this year” The analyst maintains an outperform rating on Micron stock as well as a $120 per share price target, which equates to roughly 29% upside. Micron shares are up 12% this year. While that outperforms the S & P 500’s 8% gain, it’s well below Nvidia’s 82% surge. That performance gap, however, could signal a buying opportunity into Micron’s report. “The guide/commentary should help with increased confidence in EPS [earnings per share] power of $10+, making the stock undervalued,” said Susquehanna analyst Mehdi Hosseini on Monday. The firm maintains a buy rating on Micron coupled with a $112 per share price target, more than 20% above the previous close. Citi’s Christopher Danely is even more optimistic ahead of Micron’s results. The analysts raised his price target to $150 from $95, calling for about 61% upside moving forward. The new price target is “a 50% premium to Micron’s historic range, but we believe MU stock should get a premium given increasing AI exposure and other AI-exposed stocks such as AVGO and AMD have seen a 100% increase in their multiples,” he wrote Friday. “We expect the company to post upside to Consensus and increased guidance for F3Q24 given strong DRAM [dynamic random access memory] pricing and shipments of higher-priced, higher-margin, High Bandwidth Memory (HBM) which is shipping with Nvidia AI systems,” Danely added.