Micron Technology Inc MU shares have surged after a recent reaffirmation by Mizuho, upgrading its rating to Buy and adjusting the price target from $124 to $130.
Fueled by the rapid embrace of AI technologies, analyst Vijay Rakesh highlighted the explosive growth in the HBM market, projecting a remarkable CAGR of ~65% from 2023 to 2026, with an anticipated value of $17.5 billion by 2026. During this period, HBM GB content per GPU is expected to more than double from roughly 140GB to ~280GB, positioning Micron to capitalize on increased market share.
Rakesh pointed out a significant potential turning point with the introduction of a 12-layer 36GB HBM for a 288GB stack for B200/MI400, projected to occur in the first half of 2025. This development could serve as a pivotal catalyst for the company’s growth.
Micron is on track to achieve its targets, with HBM and TSV capacity expansions set to secure a substantial ~25% market share by 2025. The company’s innovative HBM3E technology boasts inherent advantages over competitors, such as notably lower power consumption (~30%), which is driving traction among customers.
For the immediate future, Rakesh indicated that Micron has locked in HBM pricing for fiscal 2024 with early pricing commitments for 2025. However, potential supply constraints could lead to upside surprises in the coming quarters.
The negotiation of Micron’s CHIPS Act funding is crucial in balancing growth between the US and Asia, representing an ongoing strategic consideration for the company.
Rakesh reiterated his revenue and EPS estimates for the May quarter, as well as the fiscal years 2024, 2025, and 2026. The adjustments reflect his confidence in Micron’s sustained growth trajectory and its ability to outperform market expectations.
Looking beyond Nvidia, Micron’s strong performance in AI is evidenced by its partnerships with other key players in the industry, including Advanced Micro Devices, Inc., Intel Corp, and emerging custom solutions providers such as TPU, MTIA, Athena, Trainium, and Inferentia.
Capacity expansion remains a top priority for Micron, with plans to scale production by 10x in 2024, particularly in the realm of fungible DDR production. Meanwhile, competitors like SK and Samsung are also ramping up production capacities to stay competitive in the dynamic memory market.
Price Action: As of the latest data check, MU shares have surged 1.85% to reach $119.30 on Tuesday.
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