On Thursday, JPMorgan (NYSE:JPM) maintained its Overweight rating on Micron Technology (NASDAQ:MU) and increased the price target to $130 from $105. The firm's decision comes after Micron reported strong fiscal quarter results, surpassing the high end of their previous guidance.
The company also provided a positive outlook for the May quarter with anticipated revenue, gross margins, and earnings per share that exceed consensus expectations.
Micron's recent performance has been buoyed by better demand and pricing trends in the DRAM and NAND markets, which have been observed across various sectors, including smartphones, PCs, IoT, automotive, and industrial.
The improvement in datacenter inventories is expected to reach normalized levels in the first half of 2024. Furthermore, the company anticipates further price increases for DRAM and NAND throughout 2024 and into the following year, driven by demand for AI servers.
The company's capital expenditures are projected to remain steady between $7.5 billion and $8.0 billion, supporting a robust ramp-up of HBM3e, its high-bandwidth memory product. This focus is likely to limit supply growth in non-HBM products and enhance profitability.
Micron's HBM3e memory is already in high demand, with sales booked out for the entirety of 2024 and a significant portion of 2025's supply being pre-allocated.
Micron's HBM3e product, notable for its strong yields and manufacturability, is set to be integrated into NVIDIA (NASDAQ:NVDA)'s H200/GH200 GPUs. The company is also making progress on platform qualifications with multiple customers.
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