Micron's AI-Driven HBM Demand and Data Center Growth to Fuel Stock Upside, Analysts Say

Core Viewpoint - Micron Technology, Inc reported strong quarterly results, exceeding analyst expectations, and provided an optimistic outlook for the upcoming quarter, indicating continued growth in revenue and earnings per share [1][5][10]. Financial Performance - Fourth-quarter revenue was $7.75 billion, surpassing the analyst consensus estimate of $7.64 billion [1]. - Adjusted EPS for the quarter was $1.18, beating the consensus estimate of $1.13 [1]. - The company expects first-quarter revenue of $8.7 billion, with a margin of plus or minus $200 million, and adjusted EPS of $1.74, plus or minus eight cents per share [1][4][12]. Analyst Ratings and Price Targets - Morgan Stanley maintained an equal weight rating and raised the price target from $100 to $114 [2]. - Wedbush reiterated an Outperform rating with a price target of $140 [2]. - Piper Sandler maintained an Overweight rating with a price target of $150 [2]. - Rosenblatt reiterated a Buy rating with a price target of $250 [2]. - JP Morgan maintained an Overweight rating with a price target of $180 [3]. Market Dynamics and Outlook - Analysts noted that the strength in data center demand is offsetting weakness in consumer markets, particularly in smartphones and PCs [10][11]. - Micron's management expects a short-lived correction in consumer markets, with inventories normalizing by the third quarter [11]. - The company anticipates continued margin growth and favorable supply-demand dynamics through 2025, with HBM demand projected to reach $25 billion next year [5][6]. Pricing and Supply Expectations - Analysts expect pricing for both DRAM and NAND to increase, driven by limited supply and rising demand [7][12]. - Micron's HBM capacity for 2024 and 2025 is sold out, with contracts in place for pricing and units [7]. - The memory industry is viewed as being in the early stages of an up-cycle, with expectations for significant positive EPS revisions [14].