What Happened?
Shares of memory chips maker Micron (NYSE: MU) jumped 2.2% in the afternoon session after reports indicated the company planned to stop supplying server chips to Chinese data centers and Barclays raised its price target.
The move to exit the China server chip business followed a government ban on the company's products in critical infrastructure in 2023 from which the business had not recovered. Adding to the positive sentiment, Barclays analyst Tom O'Malley maintained an "Overweight" rating on Micron while increasing the price target to $240 from $195. The stock's rise was also supported by broader positive market expectations, as reflected in the strong consensus 'Buy' rating from Wall Street analysts.
After the initial pop the shares cooled down to $207.03, up 2.3% from previous close.
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What Is The Market Telling Us
Micron’s shares are extremely volatile and have had 31 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 7 days ago when the stock gained 5.8% on the news that investor fears eased as President Trump softened his tone regarding trade relations with China.
Following a sharp selloff late last week fueled by threats of an additional 100% tariff on Chinese goods, the president's more conciliatory weekend message that "it will all be fine" sparked a broad market rally. The semiconductor sector, which is particularly sensitive to international trade policies due to its global supply chains, was among the biggest beneficiaries of the improved sentiment. Chipmakers had posted significant declines during the previous week amid escalating tariff concerns. The reversal in tone helped these stocks recover a substantial portion of their recent losses as investors bought back into the sector, relieved that trade tensions might not escalate further.
Micron is up 137% since the beginning of the year, and at $207.03 per share, has set a new 52-week high. Investors who bought $1,000 worth of Micron’s shares 5 years ago would now be looking at an investment worth $3,868.
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