Micron Technology: Riding the AI Wave with Memory Chip Innovation

Micron Stock: A Bet On Continued AI Boom And Government Support (NASDAQ:MU)

Micron Technology (NASDAQ:MU; NEOE:MU:CA) is a bet that the semiconductor memory market will grow, driven by two key trends: the development of artificial intelligence (AI) and government support for US manufacturing. The Business of Micron Technology Micron Technology is one Invest Heroes LLC is a CIS-based research firm founded in 2018. Since then, we provide equity and fixed income research services which become more and more well-known locally among both professional investors and private clients. Here's what we do: - Cover top 120+ Russian, US and Chinese stocks - Cover 200+ Russian bonds (corporate, SOE's) Provide our research as a paid service to several institutional clients, a couple dozen of asset managers/PM's and about 3000 private clients Our team consists of 2 strategists as well as a team of analysts (equity market team & 1 fixed income). 9 analysts are currently working in our team, which has achieved global professional recognition. In the first year, we got into the Refinitiv and Factset, in the second year our estimates began to participate in the Refinitiv consensus, in the third year we are the best analysts in the Refinitiv rating for a number of Russian companies and we are in a process of signing with S&P Market Intelligence. Our forecasts are often ahead of the market, because of detailed business model built for each company. Contact details Sergey Pirogov CEO +7 (919) 762 76 64 [email protected] Aleksandr Sayganov Head of Research +7 (708) 1238294 [email protected] Analyst's Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

If I Could Buy Only 1 AI Stock, This Would Be It | The Motley Fool

Micron seems well positioned to ride several AI tailwinds in 2025. Artificial intelligence (AI) has been one of the hottest investment themes on Wall Street in 2024. Although the euphoria surrounding AI seems to have lessened by now, the allure of high-quality and fundamentally strong AI-powered stocks is still strong -- on the back of strong demand for AI solutions across industries and functions. With AI technologies increasingly becoming a critical component of the current technology infrastructure, investing in high-growth, AI-powered stocks can generate rich returns in the long run. Investing in multiple AI stocks can prove to be less risky than concentrating significant funds in a single stock. However, if I had to choose only one AI stock, it would most likely be Micron Technology (MU -0.14%). Here's why this stock can be a smart buy in 2025. Micron has emerged as a key beneficiary of the robust demand for memory and data storage products in data centers and various AI-powered enterprise applications. Not surprisingly, the AI tailwind is playing a pivotal role in transforming Micron's financial growth trajectory. In the recent quarter (first quarter fiscal 2025 ending Nov. 28, 2024), Micron's data center revenues were up 400% year over year and 40% sequentially, accounting for more than half of the company's total revenues. Micron's overall revenues soared by 84% year over year to $8.7 billion. The company also reported non-GAAP earnings per share (EPS) of $1.79, up 51.7% on a year-over-year basis. Analysts expect Micron's revenues to grow 39.3% year over year to $35 billion in fiscal 2025. Furthermore, they also estimate non-GAAP EPS to be $6.89, up by almost 4.3 times on a year-over-year basis. These growth expectations have made Micron a standout performer in the semiconductor industry. Micron has been rapidly expanding its footprint in the high bandwidth memory (HBM) space, increasing production of 8-high HBM3E chips and now successfully transitioning to even more power-efficient, 12-high HBM3E chips. The company's 8-high HBM3E chips are being designed on Nvidia's Blackwell B200 and GB200 platforms. Micron has also started high-volume shipments to its second largest HBM customer and plans to commence shipments to its third-largest customer in early 2025. Subsequently, Micron estimates the target addressable market for HBM to expand from more than $30 billion in 2025 to over $100 billion in 2030 -- bigger than the entire DRAM market size in 2024. The company expects to reach a share of a low-20s percentage in the HBM market by the second half of 2025. An increasing revenue shift toward HBM products can further boost Micron's profitability since these are higher-margin products. Besides HBM, Micron is also seeing strong momentum in the overall DRAM business. In the first quarter, the company reported DRAM revenues of $6.4 billion, up 87% year over year. The amount made up 73% of total revenues. This growth was mainly driven by solid DRAM demand in data centers. Micron's leadership in advanced DRAM nodes is also a major growth catalyst. The company is currently ramping up production with the 1-beta technology node and plans to ramp up production with the even more advanced 1-gamma technology node using extreme ultraviolet (EUV) lithography in 2025. Furthermore, Micron also expects to generate multiple billions of dollars in revenue in fiscal 2025 from the sale of high-capacity DRAM products. Micron estimates the overall DRAM industry bit supply to grow in tandem with bit demand in 2025. However, DRAM production with leading-edge nodes may see some tightness as HBM supply increases to fulfill rising data center demand. Plus, the company is focusing on controlling DRAM front-end costs within a mid-to-high, single-digit percentage range in fiscal 2025. While the PC refresh cycle was slower than previously expected in 2024, the end of life of Windows 10 in October 2025 and replacement of an aging installed base with AI PCs are expected to be catalysts in 2025. Since AI PCs require higher DRAM content, the company estimates significant growth even with moderate volume shipments. Micron's shares have seen significant volatility in the past few months. The company managed to surpass consensus revenue and earnings estimates in Q1. However, lower-than-expected Q2 guidance, especially for the NAND segment, seems to have negatively affected investor sentiment. Hence, the stock tanked as low as $85 after the earnings release in mid-December 2024. But since that low point, Micron's stock has recovered significantly and is trading close to $105.75 (as of Jan. 20, 2025). Micron is currently trading at 4.14 times trailing 12-month sales, slightly lower than its three-year average price-to-sales ratio of 4.42. Considering the anticipated gains from expanding AI infrastructure and DRAM strength, the discounted valuation seems to be an attractive entry point for astute investors.

This Artificial Intelligence (AI) Stock Has Jumped 30% Already in 2025. It Could Jump Another 32%, According to Wall Street. | The Motley Fool

Shares of Micron Technology (MU -1.57%) have gotten off to a hot start in 2025, gaining an impressive 30% as of this writing and outpacing the 8% gains clocked by the PHLX Semiconductor Sector index. And analysts expect the memory specialist to deliver more upside in the coming year. Micron carries a 12-month median price target of $145, according to 42 analysts covering the stock. That's potential upside of 32% from recent levels. And 83% of the analysts covering the stock recommend buying it. Let's look at the reasons it is indeed capable of delivering the gains that the market expects. The company ended 2024 on a sour note. The stock plunged last month following the release of its fiscal 2025 first-quarter results (for the period ended Nov. 28, 2024) when its guidance for the current quarter fell woefully short of expectations. Management called for $7.7 billion to $8.1 billion in revenue for the second quarter of fiscal 2025, missing the consensus estimate of $8.97 billion by a big margin. The earnings per share guidance range of $1.33 to $1.53 was also lower than the Wall Street estimate of $1.77. The company's poor guidance was a result of the slower-than-expected recovery in the smartphone and personal computer (PC) markets, which led to tepid demand for memory products from these segments. In the December earnings call, CEO Sanjay Mehrotra said: We had previously shared our expectation that customer inventory reductions in the consumer-oriented segments and seasonality would impact fiscal Q2 bit shipments. We are now seeing a more pronounced impact of customer inventory reductions. As a result, our fiscal Q2 bit shipment outlook is weaker than we previously expected. But Micron doesn't believe this weakness will last long. Mehrotra said the company expects "this adjustment period to be relatively brief and anticipate customer inventories reaching healthier levels by spring, enabling stronger bit shipments in the second half of fiscal and calendar 2025." For instance, the company sees PC shipments growing in the mid-single digits this year following a flat performance in 2024. It adds that the PC market's growth will be weighted toward the second half of the year. More importantly, the company is likely to witness stronger growth in PC memory volume this year thanks to the advent of AI-enabled PCs. The company says that entry-level artificial intelligence (AI) PCs will be equipped with at least 16 gigabytes (GB) of dynamic random access memory (DRAM), while more advanced AI PCs are expected to carry more than 24 GB of DRAM. That would be a big improvement over last year, when the average DRAM content in each PC stood at 12GB. Gartner expects AI PC shipments to jump 165% in 2025 to 114 million units following last year's estimated jump of 100%. So, Micron's PC business should improve significantly once shipments start picking up in the second half of the year. And the data center business continues to remain the bright spot as revenue from this segment increased 400% year over year in the fiscal first quarter. The company's high-bandwidth memory (HBM) chips have been selected by Nvidia for its Blackwell AI graphics processing units (GPUs), and the semiconductor company will also deploy Micron's HBM in its consumer-grade graphics cards. The company has also been winning more customers for its HBM chips. It has started volume shipments of HBM to a second customer and says that shipments to a third customer will begin in the first quarter of calendar 2025. As a result, there is a solid chance that Micron will be able to corner a bigger share of the booming HBM market that's expected to generate $30 billion in revenue in 2025 as compared to $16 billion last year. The company expects the overall HBM market to generate annual revenue of $100 billion in 2030, suggesting that it has a lot of room for growth in this niche. The discussion so far indicates that investors would do well to look at the bigger picture and move past the chipmaker's guidance miss. After all, revenue in the first quarter of fiscal 2025 increased an impressive 84% from the year-ago quarter to $8.7 billion. Micron also posted an adjusted profit of $1.79 per share as compared to a loss of $0.95 per share in the same quarter last year. Although the $7.9 billion revenue guidance for the current quarter was much lower than analysts' expectations, it indicates a robust jump of 36% from the year-ago period. The bottom line will also jump to $1.43 per share from the prior-year period's $0.42 per share. And investors can buy this fast-growing AI stock at an attractive valuation even after its recent run-up. Micron is trading at 30 times trailing earnings, while the forward earnings multiple of 14 is also quite attractive. Given that analysts expect earnings to jump 584% in the current fiscal year followed by a 44% increase in the next one, investors still have an opportunity to buy the stock, especially considering that it seems capable of delivering more upside.

Should You Forget Nvidia and Buy This Tech Stock Instead? | The Motley Fool

Chip designer Nvidia (NVDA 0.10%) is a hot topic. Its 147% total return in 52 weeks is among the 10 best performances on the S&P 500 (^GSPC 0.53%) index. The company benefits greatly from the artificial intelligence (AI) boom that started in late 2022. Leading AI experts rely on Nvidia's chips to train their systems. As a result, Nvidia sports a $3.6 trillion market value. It is the largest company in the world by some measures, and many investment pros still think it can keep climbing. The examples are both numerous and illustrious. A Motley Fool research report from the spring of 2024 found Nvidia in the top 10 holdings of many billionaires' hedge funds. Philippe Laffont's Coatue Management and Ken Griffin's Citadel fund held more Nvidia stock than anything else. Six months later, Ray Dalio's Bridgewater Associates and David Tepper's Appaloosa Management were buying more Nvidia stock. So Nvidia has its fans. You might want to follow their example and buy Nvidia stock in January 2025. After all, the generative AI craze is only getting started, and the big money will probably be made in the future. As the early king of the AI hardware hill, Nvidia is the company to beat. Then again, the pros don't nail every call. Hitting the ball on every third swing easily qualifies you for the baseball Hall of Fame. In investing, the percentages may be higher but every genius strikes out fairly often. And I'm not so sure about Nvidia being a buy right now. Overly enthusiastic investors seem to be counting on many years of perfect business results, baking unrealistic assumptions into the lofty stock price. Then there's the law of large numbers, which explains that it's more difficult to generate strong returns from a very large market cap. If you want to invest in the generative AI market today, I would suggest leaving Nvidia alone. Another semiconductor company is tapping into the same resource, and its stock looks downright cheap next to Nvidia's valuation. I'm talking about memory-chip expert Micron Technology (MU -4.02%). The company is actually a prominent Nvidia partner, providing large amounts of high-speed memory for its AI accelerator cards. In fact, Nvidia CEO Jensen Huang recently named Micron as a key supplier of important components. That statement was enough to drive Micron's stock more than 6% higher in a single day. But that's not an exclusive deal. The company serves a wide variety of customers, from consumers to massive enterprises, around the world. One Micron customer stood for more than 10% of the company's revenues in fiscal year 2024. Management didn't name it in business filings, but this giant client ordered memory chips in the mobile, embedded, and computer systems markets. These signs won't quite work for Nvidia, which doesn't do a lot of business in the mobile segment. Instead, they point to iPhone maker Apple (AAPL -0.08%) or Android owner Alphabet (GOOG -0.23%) (GOOGL -0.20%). In other words, Micron runs a diversified business where no single customer is of game-changing importance to the company's results. At the same time, Micron records a significant sale when Nvidia finds a buyer for its high-end AI products. Why pick a winner in the AI hardware wars when you can buy stock in Micron, which partners up with pretty much everybody? I haven't even talked about Micron's modest valuation yet. The stock is changing hands at 4.2 times trailing earnings and 9.8 times next year's estimated earnings. The company recently came back from a couple of years with negative bottom-line results, due to the cyclical nature of the computer memory market and a deep downturn ultimately springing from the COVID-19 pandemic. Micron has emerged from that crisis with a hard-to-beat portfolio of innovative memory products. It is the only memory chip maker of note that isn't based in South Korea, and the company's deeply American business model should serve it well in an era of intense international trade conflicts. This stock holds many advantages over Nvidia's right now. It is far less expensive. It could soar on positive trends in non-AI markets such as smartphones or chip-laden modern cars. And the memory chip industry, in which Micron plays a leading role, is due for a cyclical upswing. Four of the 16 billionaire-led funds in that research report also held plenty of Micron stock. Only time will tell which fund group made the right move, but I have high hopes for the Micron team.