When I first invested in Micron (MU) earlier this year, my expectations were optimistic. Although the stock has appreciated to around $95, representing approximately a 30% return since my purchase, I believe this is only the beginning of its potential growth. Future gains are likely to be driven by the expanding opportunities in artificial intelligence. Consequently, I have set a price target of $145 over the next 12 months.
Elevate Your Investing Strategy:
- Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.
While this may appear ambitious, Micron’s role as a key supplier of critical memory technologies in the AI sector positions it as a stable, cyclical investment.
Micron’s business has historically exhibited cyclical characteristics; however, unlike previous cycles, the company has now firmly established itself at the forefront of the AI revolution. With strategic partnerships involving leading industry players such as Nvidia (NVDA) and a strong financial foundation, Micron offers a broader potential return horizon than in the past.
Micron’s HBM3E Is a Catalyst for AI
One of the key reasons I am optimistic about Micron is the rapid growth of High Bandwidth Memory (HBM). AI systems that power platforms like ChatGPT and NVIDIA’s latest GPUs require high-performance memory capable of transferring large volumes of data at exceptional speeds. Micron’s latest product, HBM3E, meets these demanding requirements and is already being integrated into NVIDIA’s flagship AI systems.
The advanced speed and performance of HBM3E position Micron at the center of a fast-growing market segment focused on running complex AI models and applications. In fact, Micron has already fully booked its 2025 production capacity for these HBM chips, reflecting robust demand.
This is not merely a short-term surge. The HBM market is projected to grow significantly and become a substantial part of overall DRAM sales. Industry analysts estimate HBM will represent approximately 15% of DRAM sales in 2024—about double its share from 2023.
Micron anticipates the HBM market will reach over $35 billion by 2025, surpassing earlier projections. This sustained, structural growth driven by AI gives me confidence that Micron is positioned for a long-term growth trajectory rather than a temporary upswing.
Strong Financial Performance Underpins the Bull Case
Micron’s recent financial performance strongly supports my bullish outlook. In the second quarter of Fiscal 2025, the company reported revenues of $8.05 billion, marking a robust 38% year-over-year increase. Earnings per share reached $1.41, reflecting a significant recovery from the previous year and demonstrating solid operational progress and growing demand across business segments. These results exceeded market expectations, indicating strong underlying momentum.
Looking ahead, Micron’s financial outlook remains promising. Analyst projections anticipate earnings per share to rise substantially from approximately $7 in Fiscal 2025 to around $11 in Fiscal 2026. Even under a more conservative scenario of $8.00 per share in Fiscal 2026, Micron’s current valuation at roughly 13 times forward earnings remains attractive given its growth trajectory. Applying a conservative multiple of 18 times forward earnings supports my target price of $145, suggesting meaningful upside potential from current levels.
Don’t Take Your Eye Off the Ball
As with any investment, Micron faces several risks. The memory market is highly competitive, with major players like Samsung (SSNLF) and SK Hynix aggressively pursuing the AI memory segment. SK Hynix, notably NVIDIA’s current HBM memory supplier, sets a high standard that Micron is working hard to match. Monitoring the pace of technological advancements remains critical.
Geopolitical factors also present significant challenges. Past tensions between the United States and China have resulted in restrictions on Micron’s chip sales to China. Any further deterioration in relations or expanded limitations on Micron’s access to the Chinese market could negatively impact the company’s revenue and profitability, given China’s market importance.
Lastly, while the current favorable environment for semiconductor memory driven by AI demand is strong, it is likely to eventually give way to oversupply or softened demand, which could pressure Micron’s margins and revenues. That said, due to the structural growth driven by AI, I expect the next downturn to be less severe than in previous cycles.
What is the Price Target for MU Stock in 2025?
On Wall Street, Micron has a consensus Strong Buy rating based on 20 Buys, three Holds, and zero Sells. The average MU stock price target is $124.71, indicating almost 30% upside potential over the next 12 months.
Micron (MU) Remains a Cheap Buy
In summary, although my Micron investment has already gained around 30%, I remain very optimistic. Micron’s strong strategic position in the AI-driven memory market, combined with its financial turnaround and key partnerships with NVIDIA, suggests significant growth potential ahead. The market has yet to fully reflect the earnings growth that AI is likely to generate for Micron in the coming years.
While competition and geopolitical risks are real, Micron remains attractively valued. I believe that investors entering at today’s price of about $95 have a solid opportunity to achieve strong returns over the next 12 months, despite the usual market fluctuations.