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As Wall Street succumbs to the irresistible allure of artificial intelligence, a new contender emerges on the scene: Micron (NASDAQ:MU), a purveyor of computer memory technologies. Riding a wave of enthusiasm, MU stock has surged by over 55% this year, outshining the likes of Nvidia (NASDAQ:NVDA) and Super Micro Computer (NASDAQ:SMCI). The stage is set for Micron to bask in the AI limelight and potentially soar to even greater heights.
In a recent development, Bank of America Securities analyst Vivek Arya bestowed a “buy” rating upon MU stock, setting a price target of $144. The foundation for this optimism lies in the burgeoning demand for AI technology. Micron’s cutting-edge high-bandwidth memory (HBM) chip technology is poised to cater to the escalating needs of intelligent systems.
Arya further suggests that Micron is strategically positioned to escalate its market share in the HBM sector from under 5% to around 20%. Market research from Mordor Intelligence forecasts the HBM industry to reach a value of $2.52 billion in 2021, with projections indicating a jump to $7.95 billion by 2029, reflecting a robust compound annual growth rate (CAGR) of 25.86%.
Micron’s Trajectory Toward Milestone Prices
Steering our focus toward the technical landscape, MU stock wrapped up Wednesday’s trading session at $128.01. In afterhours trading, the stock witnessed a 1% surge, elevating its price to $129.49. Within this context, the concept of “whole numbers” comes into play, indicating that bullish investors may target the pivotal $130 mark.
It’s a curious market phenomenon that commodities gravitate toward round figures. Levels like $130 often serve as significant points of interest, possibly owing to the innate appeal of these “neat” numerical thresholds to human psychology.
This intriguing behavior is not merely academic but rather a practical trading strategy observed by many seasoned analysts. Therefore, odds are high that the market will maneuver MU stock toward the next notable “clean” figure of $130.
Furthermore, a bolder ambition may see the optimists strive for the $140 mark. Consulting Barchart’s Trader’s Cheat Sheet reveals significant resistance clusters ranging from $130.42 to $137.93. The journey to $140 won’t be devoid of challenges, particularly if the final roadblock at $137.93 proves insurmountable. However, should this barrier crumble, the path to $140 might just open up for the bulls.
Embarking on Options Trading for MU Stock
For investors eyeing MU stock, two promising avenues beckon. Firstly, a short-term speculation anticipates Micron reaching $130. An intriguing prospect would involve contemplating the 12 April 2024 $130 call, closing at a premium of $2.90 on Wednesday. With a narrow bid-ask spread at 2.09%, likely due to massive trading volumes, this option presents a compelling opportunity.
Alternatively, a long-term endeavor could focus on the 19 July 2024 $140 call, commanding a premium of $9 owing to an extended time horizon. Despite the higher upfront cost, the spread of just 1.08% is an enticing feature. Given the meteoric rise of AI-centric entities in recent times, the ascent to this milestone price for MU stock may be swifter than anticipated.
Undoubtedly, this strategy carries inherent risks. Nevertheless, given the fervor surrounding digital intelligence assets, Micron deserves a prime spot on every investor’s radar.
As of the publication date, the writer, Josh Enomoto, holds no direct or indirect positions in the securities discussed. The opinions expressed herein solely belong to the author and are subject to InvestorPlace.com Publishing Guidelines.
