AI has been liable for driving progress amongst loads of names within the semiconductor house, and made its presence felt once more within the newest quarterly readout from Micron (NASDAQ:MU).
In its Could quarter outcomes (FQ3), the reminiscence big beat expectations on each the top-and bottom-line. Income got here in at $6.81 billion, amounting to a considerable 81.6% year-over-year enhance whereas beating the Road’s forecast by $140 million. The corporate put a lot of the gross sales progress all the way down to AI, with the demand boosting 50% of its quarter-over-quarter knowledge heart income progress. On the different finish of the dimensions, EPS of $0.62 outpaced the prognosticators’ forecast by $0.09.
As for the outlook, Micron guided for FQ4 revenues of $7.60 billion (± $200 million) in comparison with consensus at $7.58 billion, whereas adj. EPS is anticipated to achieve $1.08 (± $0.08) vs. the Road’s name of $1.04.
In opposition to a backdrop of a constrained modern provide atmosphere, the corporate anticipates DRAM and NAND costs to rise sequentially all through the second half of the yr and into 2025, pushed by AI server demand boosting progress in HBM/DDR5 and enterprise SSDs.
That stated, the robust outcomes acquired an preliminary lukewarm response from buyers, primarily based on greater income expectations for the FQ4 information. Nonetheless, scanning the print, J.P. Morgan’s Harlan Sur, a 5-star analyst rated within the high 1% of the Road’s inventory execs, has solely good issues to say in regards to the firm’s prospects.
“We consider the crew is well-positioned to seize reminiscence content material on the robust AI /accelerated compute server deployments with HBM3e capability already offered out by CY25 and we consider the crew is starting to have visibility into CY26 demand,” defined the 5-star analyst. “AI can also be fueling demand for his or her enterprise SSD (eSSD) merchandise. Gross margins for HBM3e and eSSD are each accretive to their respective segments and we consider that ought to structurally increase their profitability profile together with cyclical demand/provide associated pricing will increase.”
Because the market continues to “low cost bettering income/margin/earnings energy,” Sur thinks the inventory “ought to proceed to outperform” by 2024 and into 2025. As such, the analyst has raised his worth goal from the prior $130 to $180, suggesting the shares may achieve 36% over the subsequent yr. Sur’s score stays an Obese (i.e., Purchase). (To observe Sur’s observe report, click on right here)
Sur is only one of many analysts boosting their worth goal for Micron proper now. The present Road common worth goal stands at $167, making room for 12-month returns of 26%. Primarily based on a lopsided mixture of 23 Buys vs. 2 Holds, the inventory claims a Robust Purchase consensus score. (See Micron inventory forecast)
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Disclaimer: The opinions expressed on this article are solely these of the featured analyst. The content material is meant for use for informational functions solely. It is extremely essential to do your individual evaluation earlier than making any funding.