Memory-chip leader Micron Technology delivered better-than-expected quarterly results and gave a bullish outlook. But Micron stock slipped on Wednesday.
At least 18 analysts raised their price targets on Micron stock after the company's beat-and-raise report late Tuesday.
However, with Micron shares up 29% through Tuesday's close from its recent breakout, many investors were locking in profits. On Sept. 5, Micron stock broke out of a cup-with-handle base at a buy point of 128.60, according to IBD MarketSurge charts.
On the stock market today, Micron stock fell 2.8% to close at 161.71.
The big driver of Micron's fiscal fourth-quarter outperformance was the AI data center market. The company's Cloud Memory Business Unit generated $4.54 billion in sales, 40% of the company's total revenue, with a 59% gross margin.
A key product for that segment is high-bandwidth memory (HBM), with sales up about 50% sequentially. Micron has expanded its customer base and now has six HBM customers. The company expects to gain market share as it ramps production of HBM4 products next year, executives said on a conference call with analysts.
"We believe Micron's HBM4 outperforms all competing HBM4 products, delivering industry-leading performance as well as best-in-class power efficiency," Chief Executive Sanjay Mehrotra said on the call. Micron's rivals in the category include Samsung and SK Hynix.
Micron Stock At Peak Valuation?
TD Cowen analyst Krish Sankar said some investors might be getting nervous about Micron stock given its history.
"The fear is that this strong beat is similar to that of April 2021, right around when the stock peaked in the 2021 upcycle," he said in a client note. "The unprecedented cloud mix for MU (~65% of DRAM revenues) along with PC/smartphone growth still in front of us suggests that this is not April '21. We feel more confident in MU stock following this print."
Sankar reiterated his buy rating on Micron and raised his price target to 200 from 180.
Morgan Stanley analyst Joseph Moore reiterated his equal-weight, or neutral, rating on Micron stock with a price target of 160.
"Even with excellent near-term conditions … the stock is nearing peak valuation if we treat them the way that we would historically treat a memory business," Moore said.
Deutsche Bank analyst Melissa Weathers reiterated her buy rating on Micron stock and upped her price target to 200 from 175.
"Overall, we are impressed by MU's disciplined execution in a rapidly changing memory environment, and continue to view the company as an underappreciated enabler of AI with the luxury of prioritizing profitability over market share," Weathers said in a client note.
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