What Happened?
Shares of memory chips maker Micron (NYSE: MU) jumped 5.3% in the afternoon session after several positive analyst actions and broad strength in the semiconductor sector lifted investor sentiment. GF Securities significantly raised its price target on the company's shares to $311 from $194. Adding to the bullish mood, UBS also increased its price target to $245, pointing to a strong demand environment and shortages in the supply of DRAM memory chips. The positive outlook was not limited to Micron. A strong quarterly report from competitor SK Hynix suggested an accelerating upcycle in the memory market. This view was supported by data from the Semiconductor Industry Association, which showed global semiconductor sales grew nearly 16% in the third quarter compared to the second quarter, signaling growing demand for memory and storage hardware.
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What Is The Market Telling Us
Micron’s shares are extremely volatile and have had 32 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 14 days ago when the stock gained 2.2% on the news that 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.
Micron is up 171% since the beginning of the year, and at $236.41 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 $4,628.
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