So far as first quarters go, Q1 has bought to be one of many best ever for Micron Know-how, Inc. NASDAQ: MU. The semiconductor inventory had already logged a stable 2023, gaining near 70%, however from the center of February by way of the center of final week, it went on to realize simply as a lot once more. 

For some time there, Micron was experiencing its longest profitable streak ever. And whilst you would possibly suppose that the inventory might take a break now, it seems like there’s nonetheless a ton extra upside to be uncovered. 

Bullish Analyst Feedback

Through the previous two weeks, upwards of 20 analysts have given recent updates on the inventory and each one in every of them has been optimistic. Final week alone, the groups at Financial institution of America and Citigroup reiterated their Purchase rankings, with Financial institution of America giving Micron shares a brand new value goal of $144 and Citi giving them one in every of $150. 

These strikes have already been echoed once more this week, with KeyCorp and Cantor Fitzgerald each reiterating their bullish stances and boosting their value targets to $150. Contemplating Micron closed Tuesday’s session at $122, having briefly topped $130 final week, we’re on the lookout for not less than a further 22% upside from present ranges. Not unhealthy for a inventory that has gained greater than 100% previously yr, proper? 

So, what precisely are the drivers behind all this bullish value motion and stances? And the way ought to these of us on the sidelines take into consideration getting concerned? 

AI Tailwinds

Nicely, for starters, it is no secret that semiconductor shares have been on the forefront of the explosion of the bogus intelligence (AI) trade, as chips and semiconductors are key merchandise wanted to harness the ability of AI. 

And despite the fact that we’re arising on a yr since that tailwind actually emerged, the newest stories counsel that demand for semiconductors is simply growing because it stays forward of what even essentially the most bullish analysts anticipate. A part of Citi’s improve final week was primarily based on February chip gross sales coming in forward of expectations and above seasonality.

The purpose has additionally been made not too long ago that Micron has benefited from an upswing in issues like dynamic RAM pricing. With high-bandwidth reminiscence being a crucial element for AI merchandise, analysts anticipate this to proceed appearing as a key tailwind to Micron’s income. For context, Micron is anticipated to generate round $700 million from this enterprise line in 2024, however this might simply leap to as a lot as $3 billion by the top of 2025. 

Smoking the Competitors

There’s additionally the truth that Micron has managed to keep away from falling out with China. Rivals Superior Micro Units and Intel two have struggled to get the inexperienced mild to promote into that market, which has spooked buyers and began to develop into a severe handbrake to any share value momentum. Working example: take into account the 50% that Micron has gained because the center of February, in opposition to AMD’s -4% drop and Intel’s -13% drop. 

Even in opposition to a lot bigger competitor NVIDIA Corp., Micron is crushing. NVIDIA, lengthy thought-about the most effective semiconductors to personal and the one with essentially the most potential, has solely tacked on 18% because the center of February. 

Whereas it is true that NVIDIA simply outperforms Micron when the timeline is pushed again to incorporate 2023 and earlier than, this current underperformance in opposition to a key peer suggests NVIDIA buyers suppose the corporate has seen sufficient positive factors for the second. On the similar time, it makes it seem like Micron buyers are in catch-up mode, which implies Micron will probably preserve being referred to as a must-own inventory for the foreseeable future. 

Earlier than you take into account Micron Know-how, you may wish to hear this.