Micron (NASDAQ:MU) spurted up the charts yet again on Tuesday, with shares rallying 11% following the announcement of the company’s new 6600 ION SSD. Micron says the product represents the highest-capacity commercially available SSD on the market, while also delivering major efficiency gains for AI-focused data centers. According to the company’s internal testing, the 6600 ION can provide up to 84x greater energy efficiency and accelerate AI preprocessing speeds by as much as 8.6x compared to traditional HDD-based setups.
Claim 55% Off TipRanks
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Discover top-performing stock ideas and upgrade to a portfolio of market leaders with Smart Investor Picks
The reaction also reflects Micron’s important position within the AI supply chain. As one of the few companies capable of producing the advanced memory and storage products required for next-generation AI workloads, the company has benefited from tight supply conditions and strong pricing power, with demand continuing to outpace available capacity.
Still, while top investor James Foord remains bullish on Micron overall, he cautions that MU is not a “set it and forget it” investment.
“The biggest long-term risk to Micron is not competition but technological progress. AI models today are extremely memory-intensive. But that is a function of current architectures and perhaps not a permanent reality,” explains Foord, who is among the top 3% of stock pros covered by TipRanks.
That’s the key variable that could undermine Micron’s thesis, according to Foord. He cites both the DeepSeek R1 release and the Alphabet TurboQuant research as examples of how the ground can quickly shift.
Foord notes how the market reacted with “genuine shock” to the DeepSeek revelations, surprised by the ability to create an efficient model without excessively spending on compute. Closer to home, TurboQuant’s purported ability to reduce AI memory demand by 6x could hit Micron where it hurts.
“It’s hard to see how Micron comes out on top when it could lose so much pricing power almost instantly,” adds Foord.
The investor is also worried about the “narrow” demand for Micron’s wares. Indeed, if AI demand is the reason for the company’s turbocharged growth, there’s little buffer if that segment starts to slow.
Meanwhile, with Micron out of the Chinese market, there’s also the possibility that Chinese competitors will seek to develop their own capabilities. That could eventually increase the global supply of memory products and cut into Micron’s revenues and margins.
Still, Foord isn’t ready to pull the plug on his investment in MU just yet, although he is starting to hedge his bets.
“With MU now sitting at over $600, the upside is much more limited, and the downside risk could be swift if the narrative changes,” sums up Foord, who is downgrading MU from a Strong Buy to a Buy. (To watch Foord’s track record, click here)
Wall Street presents somewhat of a conundrum. Though 27 Buys and 3 Holds combine to give MU a Strong Buy consensus rating, its 12-month average price target of $581.89 point to a downside of 7.5%. That seems to reflect that even some of the bulls didn’t anticipate such a rabid run-up in the share price. (See MU stock forecast)
Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.