The AI frenzy may have slowed in 2024, but its impact on various industries, especially semiconductors, remains robust. With the market projected to grow at a compound annual rate of 12.2% to reach $1.38 trillion by 2029, companies like Micron Technology (NASDAQ:MU) are poised to benefit significantly.
Micron, a key player in the semiconductor sector, has been driving advancements in memory and storage solutions since its inception in 1978. With a market value of $118.2 billion, Micron’s stock has surged by 27.8% year-to-date, outpacing the tech-heavy Nasdaq Composite’s ($NASX) gain of 2.9%.
Micron’s Strong Fundamentals
Micron’s diverse product portfolio fuels demand and revenue growth across industries, including DRAM, CXL memory, NAND flash, NOR flash memory, and auto/industrial SSDs. In the second quarter of fiscal 2024, the company reported a 58% year-on-year increase in total revenue, reaching $5.82 billion. Adjusted diluted earnings per share (EPS) also improved to $0.42 from a loss of $1.91 per diluted share in the same period last year.
Sanjay Mehrotra, President and CEO of Micron Technology, Inc. (NASDAQ:MU), expressed confidence in the company’s position, stating that their preeminent product portfolio positions them well to deliver a strong fiscal second half of 2024. He believes Micron is one of the biggest beneficiaries in the semiconductor industry of the multi-year opportunity enabled by AI.
Additionally, Micron is set to receive $6.1 billion in CHIPS Act grants from the Commerce Department to establish factories in New York, marking a significant initiative to bolster semiconductor manufacturing in the U.S. The company plans to build multiple chip plants over the next two decades, supported by Senate Majority Leader Chuck Schumer (D-NY).
Analysts’ Outlook
Despite recent market volatility, analysts remain bullish on Micron. Citi analyst Christopher Danely maintained a “buy” rating with a $150 price target, citing the company’s strong position in the DRAM market and potential for growth. Bank of America Securities analyst Vivek Arya and Wells Fargo also reiterated their “buy” ratings, with price targets of $135.
Overall, Wall Street rates Micron as a “strong buy,” with 24 out of 28 analysts recommending it as such. The mean price target stands at $125.53, representing a 15% upside potential from current levels.
Conclusion
While the chip sector faces challenges such as slowing demand and geopolitical tensions, Micron’s innovative product portfolio and market position present a compelling investment opportunity. Despite a 16% decline from its all-time high, Micron’s stock offers long-term investors an attractive entry point to capitalize on technological advancements and industry growth.
Featured Image: Megapixl
Author Faith Yakubu 
