So far as first quarters go, Q1 has received to be one of many best ever for Micron Know-how, Inc. NASDAQ: MU. The semiconductor inventory had already logged a strong 2023, gaining near 70%, however from the center of February via the center of final week, it went on to achieve simply as a lot once more. 

For some time there, Micron was experiencing its longest successful streak ever. And when you may assume that the inventory may take a break now, it seems to be like there’s nonetheless a ton extra upside to be uncovered. 

Bullish Analyst Feedback

Throughout the previous two weeks, upwards of 20 analysts have given contemporary updates on the inventory and each one in every of them has been optimistic. Final week alone, the groups at Financial institution of America and Citigroup reiterated their Purchase rankings, with Financial institution of America giving Micron shares a brand new value goal of $144 and Citi giving them one in every of $150. 

These strikes have already been echoed once more this week, with KeyCorp and Cantor Fitzgerald each reiterating their bullish stances and boosting their value targets to $150. Contemplating Micron closed Tuesday’s session at $122, having briefly topped $130 final week, we’re in search of at the very least an extra 22% upside from present ranges. Not unhealthy for a inventory that has gained greater than 100% prior to now 12 months, proper? 

So, what precisely are the drivers behind all this bullish value motion and stances? And the way ought to these of us on the sidelines take into consideration getting concerned? 

AI Tailwinds

Effectively, for starters, it is no secret that semiconductor shares have been on the forefront of the explosion of the bogus intelligence (AI) trade, as chips and semiconductors are key merchandise wanted to harness the ability of AI. 

And although we’re developing on a 12 months since that tailwind actually emerged, the latest stories counsel that demand for semiconductors is simply rising because it stays forward of what even probably the most bullish analysts anticipate. A part of Citi’s improve final week was based mostly on February chip gross sales coming in forward of expectations and above seasonality.

The purpose has additionally been made lately that Micron has benefited from an upswing in issues like dynamic RAM pricing. With high-bandwidth reminiscence being a essential part for AI merchandise, analysts anticipate this to proceed appearing as a key tailwind to Micron’s income. For context, Micron is anticipated to generate round $700 million from this enterprise line in 2024, however this might simply bounce to as a lot as $3 billion by the top of 2025. 

Smoking the Competitors

There’s additionally the truth that Micron has managed to keep away from falling out with China. Opponents Superior Micro Units and Intel two have struggled to get the inexperienced gentle to promote into that market, which has spooked traders and began to develop into a critical handbrake to any share value momentum. Working example: think about the 50% that Micron has gained because the center of February, towards AMD’s -4% drop and Intel’s -13% drop. 

Even towards a lot bigger competitor NVIDIA Corp., Micron is crushing. NVIDIA, lengthy thought of top-of-the-line semiconductors to personal and the one with probably the most potential, has solely tacked on 18% because the center of February. 

Whereas it is true that NVIDIA simply outperforms Micron when the timeline is pushed again to incorporate 2023 and earlier than, this latest underperformance towards a key peer suggests NVIDIA traders assume the corporate has seen sufficient good points for the second. On the identical time, it makes it appear like Micron traders are in catch-up mode, which suggests Micron will seemingly hold being known as a must-own inventory for the foreseeable future. 

Earlier than you think about Micron Know-how, you may wish to hear this.