Micron (MU) stock may be Wall Street’s next big chip winner

Micron Technology (MU) slid last week as concerns over memory chip oversupply resurfaced, but some analysts say the market may be missing the bigger story.

The selloff followed a Goldman Sachs report warning of potential pricing pressure in the memory chip market, particularly for SK Hynix.

The South Korean chipmaker could face margin compression next year as rival Samsung ramps up production of high-bandwidth memory (HBM) chips.

Micron wasn’t mentioned by name, but that didn’t stop the sell-off. MU stock fell in three of five trading sessions last week, slipping below $115.

The stock is still up 30% in 2024, thanks to a near-80% rebound from April’s lows. By comparison, the Nasdaq Composite is up just 8% year-to-date and has climbed 36% from its April bottom.

So why are some analysts staying bullish on Micron?

Mizuho Securities thinks investors may be overlooking Micron’s edge in next-gen AI memory.

In a recent note, the firm said Micron’s upcoming HBM4 chips could command average selling prices 15–20% higher than current versions, thanks to larger die sizes and better performance.

That pricing power, combined with Micron’s momentum in AI-driven DRAM demand, is expected to boost both revenue and gross margins.

Mizuho called Micron “better positioned than peers” to weather near-term volatility, especially given its strength in high-performance graphics memory.

That optimism lines up with Micron’s latest earnings beat.

The company posted fiscal Q3 earnings of $1.91 per share on revenue of $9.3 billion, handily beating estimates of $1.60 on $8.87 billion.

Operating cash flow more than doubled to $4.61 billion from $2.48 billion a year ago.

Meanwhile, Mmost analysts chalk the short-term dip up to profit-taking. MU had already rallied over 50% this year before the results.

Moving forward, Micron expects fourth-quarter revenue to jump 38% year-over-year to $10.7 billion, well ahead of the $9.9 billion Wall Street forecast.

One key driver is its data center segment, which more than doubled last quarter.

CEO Sanjay Mehrotra said the company is making “disciplined investments to build on our technology leadership and manufacturing excellence to satisfy growing AI-driven memory demand.”

In a market full of AI buzz, Micron may be flying under the radar, but its numbers, margin profile, and product roadmap suggest it won’t stay there for long.