Micron's stock (NASDAQ: MU) has again recaptured the $100 level, trading at $103.11 after a rebound that has seen the price add 17.16% over the past 5 trading sessions. Looking at the 1 year chart on the daily candles (below), and it is clear to see that this is a pattern that has played out a few times in recent months, with the stock on each occasion struggling to hold the level and falling back into the $80 range.
The company had been a beneficiary of the artificial intelligence (AI) trade, with the recent cooling having an impact. Despite this cooling in the market, Micron has continued to hold bullish sentiment, with gains of 18% year-to-date a significant outperformance on broader negative markets. With earnings on deck this week, there could be some fundamentals on the horizon that may help the bulls to look up instead of down.
The upcoming Q2 earnings report is expected to be a strong confirmation of this positive trajectory. Analysts are forecasting revenue of approximately $7.93 billion, representing a substantial 36% year-over-year increase. Earnings per share (EPS) are projected to land around $1.43, a stark contrast to the losses experienced in the prior year. The company has a history of beating on both top and bottom lines, with each of the reports over the past year coming in to the upside. Markets will be expecting more of the same, no doubt with guidance that beats the street to maintain momentum.
The driving force behind some of the optimism in Micron is multi-faceted. First and foremost, the company is experiencing a resurgence in demand for its DRAM and NAND memory chips, fuelled by the insatiable appetite of AI applications for high-bandwidth memory. The “improved pricing outlook” cited by UBS analysts, who recently raised their price target to $130, underscores this trend. A tighter supply environment, combined with the ever-increasing memory requirements of AI training and inference workloads, is allowing Micron to command higher prices and improve its margins.
Beyond the core memory market dynamics, Micron is strategically positioned to capitalize on broader technological shifts. The recent announcement from Meta Platforms regarding its substantial investment in humanoid robotics is a significant positive indicator. This push by Meta will not only likely boost demand for Nvidia's GPUs (which utilize Micron's memory), but also directly increase the need for Micron's own memory and storage solutions within the robots themselves. This expands Micron's addressable market beyond traditional computing and into a rapidly growing, high-value segment.
The consensus “Strong Buy” rating from analysts, coupled with an average price target of $129.50 and a high estimate of $250, clearly indicates the bullish sentiment surrounding the stock.
However, it's crucial to temper this enthusiasm with a degree of cautious realism. The 50-day and 200-day moving averages ($96.23 and $105.07, respectively) currently suggest a “bearish” trend, largely brought about by the broader market pullback that caught everything in it's wake. Uncertainty surrounding tariffs, and the DeepSeek drop have made their mark on the market.
While the current AI-driven boom is providing a strong tailwind, any slowdown in AI investment or a broader economic downturn could impact Micron's performance. Supply chain disruptions, although seemingly less of a concern at present, remain a potential risk factor. It is also worth mentioning that Micron's CEO, Sanjay Mehrotra, projected the semiconductor industry to exceed $1 trillion.
The company's strong fundamentals, favorable industry trends, and positive analyst sentiment suggest continued growth potential. However we remain mindful of the inherent volatility of the semiconductor sector and broader market ahead of the next tariff date on April 2nd. The Q2 earnings report will be a critical event, providing further clarity on Micron's near-term outlook and its ability to maintain its impressive momentum. If the stock can hold, and finally break free of the range it has been stuck in for the past 6 months, eyes may turn to $110 as being the next level to watch on the upside.
