Memory chipmaker Micron Technology (NASDAQ:MU) saw its shares surge nearly 15% on Thursday, following its optimistic first-quarter revenue outlook, which highlighted robust demand and pricing for high-bandwidth memory chips (HBM) essential for the fast-growing generative AI sector.
Micron, one of the key suppliers to AI darling Nvidia (NASDAQ:NVDA), boosted its market capitalization by roughly $15 billion on the day. The stock surged around 27% in the past three weeks.
In its fourth-quarter results, which ended on August 29, Micron reported its strongest quarterly revenue growth in a decade, with its current forecast significantly surpassing Wall Street expectations.
In the wake of the report, an analyst at Mizuho said it’s “really not a good day to be short memory and semi-cap equipment stocks.”
“For the memory and semi cap eqpt bears, I would advise against going down in a ball of flames and cover shorts and consider getting long some key semi winners even if you dislike MU and not willing to chase this 15%+ rip at the open,” they added.
“Personally, I think the MU rally will sustain and pull in many of these long/short haters who will flip from short to long at least for the near term.”
Meanwhile, Samsung Electronics (LON:0593xq) Co's Ltd (KS:005930) strategy for conventional DRAM capacity and bit growth continues to be a major uncertainty in the memory market through 2025, Mizuho added. Samsung, like Micron, also produces AI memory chips.
However, Mizuho believes two factors could mitigate potential aggressive moves by Samsung in the conventional DRAM market
First, Micron is aggressively shifting focus away from lower-margin PC and smartphone segments toward higher-margin, high-value products like HBM servers, and data center chips. Micron management remains confident that their technology leads in power and performance over competitors like SK Hynix Inc (KS:000660) and Samsung, according to Mizuho.
Second, the U.S. government is expected to add China's leading DRAM manufacturer, ChangXin Memory, to the entity list, cutting them off from global semiconductor equipment imports.
While this won't stop China from producing conventional DRAM for PCs and smartphones, it will “materially reduce risk over coming years that China can flood DRAM market with supply and crush pricing or take market share,” the analyst emphasized.