Micron's shares dropped 7% on Friday, wiping out part of Thursday's 3.2% gain, but the chipmaker still ended the week about 6% higher. On the same day, SK Hynix American depositary receipts fell 8.8% after a modest 2.6% rise the day before.
The memory chip sector faced a tough month, with Micron shares down nearly 13% over the past 30 trading sessions and SK Hynix's Seoul-listed stock plunging close to 33% in the same period. Worries about how sustainable memory chip pricing can be have weighed heavily on these stocks despite their recent bounce.
Positive news came from Alphabet's quarterly results, which showed continued growth in data center capital spending. This lifted spirits among memory manufacturers, including Micron, even as Alphabet’s stock suffered its largest single-day market cap loss ever.
Bank of America's Bullish Outlook
Throughout the week, Bank of America kept its Buy rating on Micron, setting a price target of $1,550. This suggests a potential upside of around 65% from current levels. The firm challenged skepticism regarding whether China’s Kimi K3 AI model might slow AI infrastructure investments. Instead, it argued that as AI models become more efficient, demand for high-bandwidth memory, DDR5, and NAND storage could accelerate.
BofA also highlighted that open-weight AI architectures might significantly expand Micron’s market by attracting thousands of businesses to run AI on their own infrastructure instead of relying solely on hyperscale cloud providers.
Currently, Micron trades at about 21.5 times its trailing twelve-month earnings and 13.1 times forward earnings, which is below the average for the semiconductor industry. Other institutions such as KeyBanc, TD Cowen, Bernstein, and Citigroup also hold positive views, with consensus price targets around $1,495, indicating about 60% upside.
Micron reported record Q3 revenue of $41.46 billion, marking a stunning 346% increase year-over-year. Upcoming quarterly earnings from tech giants Microsoft and Amazon may further influence memory chip stocks, potentially adding momentum for industry players.
