Micron Technology (NASDAQ: MU) is having a banner year. The company’s share prices have spiked by 58% YOY, and Micron is showing no signs of slowing down. While it’s definitely being bolstered by a strong overall recovery in the memory market, analysts believe that the company has a lot more going for it than just a healthy tailwind. Here’s a deeper look.

Micron's Place in the Semiconductor Industry

Micron is seeing massive demand for its powerful DRAM chips in two market sectors: AI-powered personal computers and AI servers. AI PCs need a minimum of 16 GB DRAM, yet a 2023 survey by Steam revealed that nearly half of gamers are still using just 8 GB chips. As more users make the switch to AI computers, Micron is poised to capitalize on the trend.

AI servers require high bandwidth memory (HBM), which consists of DRAM stacks, and demand for HBM is predicted to increase by almost 40% annually through 2029. Yet Micron’s HBM capacity is already sold out through 2025. If the company scales up production quickly, its sales could be astronomical.

What the Industry Thinks

Analysts are bullish on Micron for several reasons. Not only is demand red hot, but potential shortages mean that memory chip prices are also expected to increase, possibly quite significantly, over the next year. Micron is expected to see its revenue rise by about 86%, to an eye-popping $7.48 billion, with a profit of just under $1 per share. Meanwhile, Micron is currently trading at 7.8 times sales and 14.8 times forward earnings. But if the June 26th quarterly report goes as expected, it’s highly likely to experience another surge. If you’ve been on the fence about buying into the chip market, now could be an excellent time to get in on Micron.

Neither Lisa Fritscher nor Stocks.News have positions in this company.