Micron Technology Inc (NASDAQ:MU) stock rose 0.057% (As on September 19, 11:35:54 AM UTC-4, Source: Google Fina–nce) after the company receives an upgrade from Deutsche Bank by analyst Sidney Ho from “hold” to “buy,” as well as a raised price target to $85 a share from $65 a share. This all comes down to pricing for their DRAM chips (semiconductor Direct Random Access Memory) here, which is hitting an inflection poin. They’re improving faster than expected, a lot of that being driven by demand for AI servers and the critical part that their chips play in this. And they think it’s going to have a real impact, a material impact here in the coming quarters with that pricing likely accelerating here on out.
And one particular quote that jumps out, they had a previous neutral stance on Micron driven by levels of excess inventory in the supply chain, weak macro in demand. They now see the worst of the down cycle behind them. So that has given some of the aggressive production cuts by all suppliers, as well as pockets of demand strength, particularly in AI servers, here. So that, particularly going to be interesting to continue to watch for this story with Micron Technology.
Meanwhile, MU said that the sales will be as much as $4.1 billion in the fiscal fourth quarter. The company believes that the memory industry has passed its trough in revenue, and it expects margins to improve as industry supply-demand balance is gradually restored. Micron and its peers suffered a slowdown in orders after a fall in demand for smartphones and personal computers, which led to a buildup of inventory. The company’s sales projection suggest that the demand has improved. However, even though Micron’s customers are emerging from a pile of excess inventory, the company isn’t predicting a rapid return to growth in 2023. Personal computer shipments are expected to decline by a “low double-digit” percentage from a year ago.
Further, the company has signed a memorandum of understanding with the Gujarat government for setting up a $2.75 billion semiconductor assembly and test facility at Sanand in the Ahmedabad district. Micron will receive 50 percent fiscal support for the total project cost from the Indian government and incentives representing 20 percent of the total project cost from the Gujarat government.