Analysts overhaul Micron stock price targets amid post-earnings slump

Updated at 9:forty four AM EDT

Micron Technology shares moved lower in early Thursday trading following a rare 'double downgrade' for the A memory chip maker since it continues to suffer its long summer slump.

Micron (MU) , which has underperformed its chipmaking rivals moreover to the broader tech sector this year, is calling to capitalize on the AI investment surge through its high bandwidth memory chips.

The group posted solid third-fiscal-quarter earnings in June and said current-quarter sales would rise ninety% from last year to around $7.6 billion, tied to demand for its new HBM3E chips, so that you may be now being built into Nvidia's (NVDA) H200 processors and its newly developed Blackwell systems.

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Micron also told investors that it expects to generate "a couple of billions of bucks in revenue from HBM in fiscal 2025," which ends in August, adding that its share of the newly emerging market would be "commensurate with our overall DRAM market share" sometime next year.

The stock, alternatively, has fallen greater than Forty% since that late-June update, thanks partly to concern concerning the high valuations for AI-related chip stocks and the gigantic amounts of capital spending required to meet production and demand forecasts.

Micron sees sharp rise in capital spending

Capital spending will should extend significantly, alternatively, to enable that kind of production ramp. And Micron, which forecasts around $8 billion in capital expenditure for the current fiscal year, sees that figure rising to across the "mid-30p.cs range of revenue for fiscal 2025."

At current forecasts, which can translate to capex of $thirteen.5 billion, a near 70% increase from fiscal 2024 levels.

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Exane BNP Paribas analyst Karl Ackerman, who issued a rare 'double downgrade' for Micron stock, taking his rating to 'underperform' expects the group's lackluster performance to continue.

"While some investors are responsive to the downside risk to near-term results, we agree with Micron will underperform its artificial intelligence peers through 2025 owing to an oversupply of high bandwidth memory, leading to a faster-than-expected correction in conventional DRAM selling prices," Ackerman said.

"Our earnings estimates for 2025 and 2026 are 34% and 45% below consensus, respectively," he added.

Ackerman also slashed his Micron stock price target by $seventy three, taking it to $67 a share.

Raymond James: Micron DRAM cycle 'has legs'

Raymond James analyst Srini Pajjuri, meanwhile, also lowered his Micron price target in a note published Thursday, cutting it to $a hundred twenty five from $160 while keeping his 'outperform' rating in place.

The analyst became more optimistic concerning the group's near-term performance, arguing that weakness has been priced in to the stock and the logo new DRAM cycle "has legs."

Other analysts have argued that Micron will probably be in a position to generate better pricing power for its legacy DRAM memory chips, owing to its HBM developments and market-share gains.

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Micron's DDR5 random get entry to memory, released in 2020, also provides more performance with less power than its predecessors, while solid-state drives are used in flash-memory storage on laptops and desktop computers.

"We're within the early innings of a multi-ear race to enable artificial general intelligence, or AGI, so that they can revolutionize all aspects of life," CEO Sanjay Mehrotra told investors in June.

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"AI also will permeate to the brink via AI PCs and AI smartphones, moreover to smart automobiles and intelligent industrial systems," he added.

"These trends will drive significant growth within the demand for DRAM and NAND, and we agree with that Micron will probably be thought of one of many most largest beneficiaries within the semiconductor industry of the multi-year growth opportunity driven by AI."

Micron shares were marked four.9% lower in early Thursday trading to change hands at $85.ninety four each and every, a move that trims the stock's 2024 gain to simply four.5%.

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