As Micron (NASDAQ:MU) gears up to announce its fiscal Q2 2024 results, investors are eagerly awaiting insights into the company’s strategic positioning amidst the dynamic landscape of emerging memory trends and the integration of AI-accelerated computing. Micron finds itself at a pivotal juncture, where its efforts to leverage the transformative potential of AI intersect with the evolving demands of the memory market.
One of the key elements shaping Micron’s strategy is its strategic collaboration with Nvidia, a prominent player in the AI and computing space. Together, Micron and Nvidia are pushing the boundaries of innovation by distributing High Bandwidth Memory (HBM3e) memory alongside Nvidia’s powerful GPUs. This partnership underscores Micron’s commitment to harnessing the vast opportunities presented by the burgeoning AI sector, which is projected to witness significant growth, with the AI server retooling market estimated to reach a staggering $1 trillion.
Analyst Christopher Danely from Citi sees Micron’s collaboration with Nvidia as a pivotal driver of growth. Anticipating a robust performance in the upcoming earnings report, Danely expects Micron to surpass consensus estimates and raise guidance for the subsequent quarter. The analyst foresees Micron delivering an EPS of ($0.28) for the quarter, buoyed by strong DRAM pricing and shipments of high-margin HBM memory. Revenue is projected to climb to $5.30 billion, marking a notable 12% sequential increase in line with market expectations.
Looking ahead, Danely remains optimistic about Micron’s growth trajectory, particularly in light of its AI exposure and its peers’ expansion in the sector. He anticipates Micron’s multiple to expand, driven by its strategic positioning and the increasing demand for AI-related technologies. Expressing confidence in Micron’s long-term prospects, Danely raised his price target to $150, signaling a substantial upside potential of approximately 60% from current levels.
Danely’s bullish outlook is echoed by the broader analyst community, resulting in a Strong Buy consensus rating for Micron. While the average target price of $104.76 suggests a more conservative 12-month return of around 12%, the overall sentiment remains positive, underpinned by Micron’s strategic initiatives and its potential to capitalize on the evolving AI landscape.