What Happened?
Shares of memory chips maker Micron (NYSE: MU) jumped 3.1% in the afternoon session after it received a positive outlook from Stifel and a price target increase from GF Securities, fueled by optimism around its data center business.
Stifel's analysts noted that the market "under-appreciates the significant change in composition of Micron's datacenter revenue," which now accounts for the majority of sales with gross margins approaching 50%. The firm also expressed a bullish view on memory pricing through the end of the year. Adding to the positive sentiment, GF Securities raised its price target on the stock to $138 from $116. This optimism is tied to Micron's key role in the expanding AI and data center markets. Further speculation suggested the company could be a potential buyout candidate due to its command of high-bandwidth memory (HBM) and its strategic position as a U.S.-based memory manufacturer.
The shares closed the day at $135.22, up 2.9% from previous close.
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What Is The Market Telling Us
Micron’s shares are very volatile and have had 25 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 11 days ago when the stock dropped 2.7% on the news that the semiconductor sector pulled back, triggered by a disappointing forecast from peer Marvell Technology. Marvell, a supplier of custom AI semiconductors, saw its stock plunge after forecasting its next-quarter revenue below estimates due to a slowdown in its custom AI chip business. The news created worry across the industry, leading to a broad sell-off that saw the PHLX Semiconductor Index (SOX) drop more than 3%.
Micron is up 56% since the beginning of the year, and at $136.25 per share, has set a new 52-week high. Investors who bought $1,000 worth of Micron’s shares 5 years ago would now be looking at an investment worth $3,018.
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