While there is little doubt that the advent of artificial intelligence (AI) will have a far-reaching impact on the technology world, it is also clear that its effects will be gradual. Here are some companies that are beginning to realize the impact AI can have on their business results. micron technology (NASDAQ:MU)provides memory and storage solutions integrated with other processors.
The stock has risen 110% over the past year, but one Wall Street analyst believes there's even more to come.
The heart of the AI revolution
key bank Analyst John Bing maintains an overweight (buy) rating on Micron's stock, while raising his price target to $150. For investors, this means there is room for an upside of about 22% over the next 12 months or so compared to Monday's closing price.A channel check suggested that the company's HBM3E (High Bandwidth Memory 3E) chip “significantly outperformed” competing products in terms of power consumption and Heat relief.
The analyst went further, suggesting that Micron has enough HBM production capacity to exceed revenue projections of “hundreds of millions” of dollars and could ship more than $1 billion this year.
AI drives strong demand
Analysts' conclusions are difficult to argue with. Micron reported its financial results for the second quarter of fiscal 2024 (ending February 29), with sales of $5.8 billion, an increase of 58% from the same period last year. Management's forecasts suggest this acceleration will continue, as the company plans to increase third-quarter sales by 76% to $6.6 billion. At the time, management noted that Micron's HBM3E solution “consumes 30% less power” compared to competitors, helping drive strong demand.
The amount of energy required to power generative AI systems is enormous, so there is an ongoing race to find more power-saving and cost-effective solutions. Nvidia has given Micron's HBM3E its stamp of approval and integrated the chip into its H200 data center GPU. Nvidia said the H200, powered by Micron's chips, has “nearly twice the capacity and 2.4 times the bandwidth compared to the previous generation Nvidia A100.”
Additionally, at just 4x forward sales, Micron stock is a buy, offering plenty of AI-powered upside at a bargain basement price.
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Danny Vena holds a position at Nvidia. The Motley Fool has a position in and recommends Nvidia. The Motley Fool has a disclosure policy.
Micron Technology stock has room for a 22% upside, according to one Wall Street analyst.Are stocks near all-time highs a buy? Originally published by The Motley Fool
