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Micron's Stock Rises In Anticipation Of A Speedier Recovery In Chip Demand

Micron's Stock Rises In Anticipation Of A Speedier Recovery In Chip Demand
The stock of chipmaker Micron Technology surged 7% following its forecast of a robust reversal in the supply-demand balance for flash storage and memory in 2024.
The company reported quarterly results on Wednesday that were better than expected by the market and indicated that memory chip prices would rebound from a months-long decline in the next year with a strong February quarter.
On Thursday, its shares reached a nearly 21-month high of $85.99. This year, they have gained almost 60% as they have anticipated an industry revival.
According to Micron, stock levels for the majority of its clients in the industrial, automotive, mobile, and personal computer markets are either at or close to normal, while data centre inventories are expected to attain those levels in the first half of 2024.
"Market rebounds are happening earlier than we previously thought," Morningstar analysts said.
Other semiconductor makers that would report early in the new year had similar expectations generated by Micron's positive results for the quarter that ended on November 30 and its outlook, which caused their shares to rise.
Due to increases in the stock prices of firms including Nvidia (NVDA.O), Advanced Micro Devices, Qualcomm, Intel, and Broadcom, the Philadelphia SE Semiconductor index increased by 2%.
Additionally, Micron stated that it was "the final stages" of qualifying its high-bandwidth memory chips for use in the most potent AI platforms offered by Nvidia.
According to the business, these premium memory chips are among Micron's most lucrative offerings and will bring in "several hundred million" dollars in sales during the company's 2024 fiscal year.
Experts predict that demand driven by AI will support Micron's recovery.
According to Piper Sandler analysts, growing demand for these chips is "likely to be a tailwind for MU (Micron) for at least the next 2 quarters and likely longer".
Based on the results, at least 12 brokerages increased their price targets, according to LSEG data. For the upcoming year, Micron's forward price-to-earnings ratio is 32.45, while the industry's is 21.03.

Christopher J. Mitchell

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