micron technology (NASDAQ:MU) The top memory chip supplier's sharp recovery has seen its stock nearly double in the past 12 months. The stock is currently trading near $120 after hitting a 52-week high of $130 earlier this year, but demand for high-bandwidth memory in artificial intelligence (AI) servers could trigger further gains. there is a possibility.
Baird believes there is “meaningful upside” for Micron. Analyst Tristan Guerra upgraded the stock from Neutral to Outperform, with a price target of $150, implying a 25% upside from the current price.
AI is Micron's growth promoter
To prepare for the future of AI, data centers are making significant investments to increase data capacity, network speeds, and processing power. Micron is in the midst of his AI arms race, with sales up 57% year-over-year in the second quarter of fiscal 2024 (ending February 29).
A key to Micron's growth has been the limited supply of memory chips, which has pushed up selling prices. An internal Baird study found that the price trend for dynamic random access memory (DRAM), which accounts for nearly three-quarters of Micron's revenue, is trending stronger than previously expected.
Management expects sales to reach approximately $6.6 billion in the current quarter, up from $3.8 billion in the year-ago period. The company also expects profitability to improve significantly.
Is the stock heading toward $150?
Analysts expect earnings to reach $10.05 per share by fiscal 2026. If the stock price reaches the $150 price target, the forward price/earnings ratio (P/E) based on that forecast will be 15 times, the same as Micron's. Therefore, Baird has a reasonable expectation of where the stock will trade over the next 12 to 18 months.
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John Ballard has no position in any stocks mentioned. The Motley Fool has no position in any stocks mentioned. The Motley Fool has a disclosure policy.
Will Micron Technology stock reach $150? 1 Wall Street analysts think so.Originally published by The Motley Fool
