Micron stock has been volatile with strong results, demand for memory products driving growth.

From Nasdaq: 2024-08-14 00:12:59

Micron Technology (NASDAQ: MU) stock has been volatile, rising 85% in early 2024, then falling 40%, resulting in a year-to-date return of 8%. Factors impacting the stock include recovery in the memory market driving demand for DRAM chips and generative AI trends that increase demand for memory products like High Bandwidth Memory (HBM). Micron posted strong Q3 FY’24 results, but guidance for Q4 was in line with consensus, leading to a slight sell-off.

Generative AI trends are boosting demand for DRAM products from Micron, as these models require considerable storage. HBM memory is also in demand, but supply could be constrained due to higher production costs. Micron’s HBM capacity is fully sold for 2024 and most of 2025. This will likely lead to stronger DRAM pricing for the company.

Compared to the S&P 500’s 40% increase since January 2021, MU stock has climbed 20%. In contrast, Arista Networks (NYSE: ANET), a beneficiary of generative AI, has surged over 300%. Arista is part of the Trefis High Quality (HQ) Portfolio that has consistently outperformed the S&P 500. Micron’s valuation is reasonable at 10x FY’25 earnings, but concerns about the global economy and capacity constraints are worth noting. Trefis has a $114 price estimate for Micron stock, about 22% above the current market price.

In terms of returns, Micron has seen a month-to-date return of -16% in August 2024, a year-to-date return of 8%, and a total return of 328% from 2017-2024. In comparison, the S&P 500 had a month-to-date return of -6% in August 2024, a year-to-date return of 9%, and a total return of 132% from 2017-2024. The Trefis Reinforced Value Portfolio had a month-to-date return of -2% in August 2024, a year-to-date return of 5%, and a total return of 680% from 2017-2024.



Read more at Nasdaq: What’s Happening With Micron Stock?