Micron Stock Surges on Optimistic Forecast for Chip Demand Recovery

Micron Stock

Micron Technology (NASDAQ:MU), a leading chipmaker, witnessed a 7% surge in its shares on Thursday following a robust quarterly performance and an optimistic outlook for the supply-demand balance in memory and flash storage in 2024. The company’s quarterly results exceeded market expectations, signaling a strong recovery in memory chip prices and flash storage.

Micron’s shares reached a near 21-month high, rising to $85.99 on Thursday, and have gained approximately 60% over the year in anticipation of an industry-wide recovery. The company’s positive outlook suggests a quicker rebound in the supply-demand balance for memory and flash storage.

According to Micron, stock levels for most of its customers in personal computers, mobile devices, automotive, and industrial markets are either at normal levels or near them. Datacenter inventories are expected to approach normal levels in the first half of 2024. Morningstar analysts noted that market rebounds are happening earlier than initially anticipated.

Micron’s strong performance and positive forecast have raised expectations for other chip companies reporting early next year, contributing to a 2% rise in the Philadelphia SE Semiconductor index. Companies like Nvidia, Advanced Micro Devices, Qualcomm, Intel, and Broadcom experienced gains in their shares.

Micron also revealed that it is in the final stages of qualifying its high-bandwidth memory chips for use in Nvidia’s powerful AI platforms, indicating a potential boost in revenue for fiscal 2024. The demand for AI-fueled chips is expected to be a significant factor driving Micron’s rebound, providing a positive outlook for at least the next two quarters.

Following Micron’s results, at least 12 brokerages raised their price targets, and the company’s forward price-to-earnings ratio for the next 12 months is 32.45, compared to the industry’s 21.03. The optimistic forecast and positive market sentiment position Micron for potential growth in the coming quarters.

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