Shares in Micron Technology rose during Monday’s early trading session as one of the most prominent Wall Street analysts highlighted the promise of the memory chip market ahead of the company’s quarterly earnings report.
Despite lagging Nasdaq’s gains this year, it is Micron’s advance into high-bandwidth memory HBM chips that place the company at the frontiers of the rapidly expanding AI segment. These chips, including the variant, HBM3E, which is being integrated with the Nvidia H200 processors and next-gen Blackwell systems, are crucial to improving AI performance in power consumption.
A Boost from U.S. Support
In further efforts to strengthen the company’s position in HBM, Micron received a U.S. investment of $6.1 billion. CHIPS and Science Act for its $125 billion new production facilities in New York and Idaho. According to U.S. Secretary of Commerce Gina Raimondo, these chips form “foundational to advanced technologies,” which is why domestic production is so important.
The company estimates the HBM market will grow to around $25 billion in 2025 from $4 billion in 2023. Analysts expect a Micron report out on Wednesday to have it turn in per-share earnings of $1.72, with revenue jumping 85% from a year earlier at $8.72 billion.
Opportunities and Challenges
While demand for HBM chips is surging, weak pricing for DRAM products has to do with declining consumer demand. However, analysts can already see signs of recovery, in this case, as Citigroup’s Christopher Danely maintains a $150 price target, citing data center demand.
According to Elazar Advisors’ Chaim Siegel, memory chips from Micron are a critical driving force in the tech market. “Memory is in everything tech, and tech drives markets,” he said, adding that strength in AI needs to balance weakness in other areas.
Micron shares traded 2.6% higher in premarket trading after investors showed confidence in its growth strategy focused on AI as well as its leadership in HBM technology.
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