Micron Technology Inc. (NASDAQ: MU) has experienced a nearly 40% decline since mid-June, despite being a key beneficiary of the artificial intelligence boom, which significantly improved its profits and revenues in 2024.
Broader challenges, such as fears of an impending economic slowdown and potential trade restrictions with China, have weighed heavily on the semiconductor industry.
However, as Micron prepares to release its financial results for the fourth quarter on September 25, there are strong indicators that the memory chipmaker could break free from these challenges and see a rally in its stock price.
Micron Stock positioned for growth
In June, Micron projected a sequential revenue increase of 12%, aiming for $7.6 billion in its fourth fiscal quarter.
However, data from TrendForce, a leading market intelligence provider based in Taiwan, suggests that the growth in the DRAM industry during this period may exceed Micron’s guidance.
Moreover, NAND prices are expected to rise by 5% to 10% sequentially, which could further bolster Micron’s earnings for the quarter.
Analysts anticipate that Micron will report earnings of 97 cents per share this quarter, a significant turnaround from a loss of $1.21 per share during the same period last year.
A strong earnings report could attract income investors, especially since Micron currently offers a dividend yield of 0.49%.
Notably, some analysts even suggest that Micron might represent a smarter AI investment than Nvidia.
Micron shares trading at a discount
Currently, Micron shares are trading at a forward price-to-earnings (P/E) ratio of just 10, making them an attractive option considering the company’s accelerated growth driven by AI tailwinds.
The global memory market is projected to reach $360 billion by the end of the decade, up from $136 billion in 2022, according to Fortune Business Insights.
This substantial growth potential is one reason why JPMorgan analyst Harlan Sur recommends investing in Micron shares ahead of the earnings report.
He believes that AI-driven server demand could push MU’s stock price up to $180, representing nearly a 100% increase from current levels.
These favorable catalysts could also enhance Micron’s outlook.
For instance, the company’s HBM3E capacity is sold out through 2025, with significant growth anticipated in fiscal 2025.
The surge in AI demand for high-bandwidth memory and enterprise solid-state drives is expected to boost profitability.
Wall Street is optimistic about Micron’s prospects, expecting the Nasdaq-listed firm to guide for approximately $8.55 billion in revenue for its fiscal Q1.
As the semiconductor industry evolves, Micron’s ability to adapt and thrive in a competitive landscape may position it well for continued success.
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