Micron Technology (NASDAQ: MU) has been through a lot in 2024. After an impressive surge of 80% earlier in the year, its stock faced a mid-year slump due to concerns over market saturation and peak valuations. However, the company’s outstanding performance in Q4 FY2024 has helped to restore investor confidence. As Micron’s Q1 FY2025 earnings report approaches on December 18th, top investor Victor Dergunov sees significant potential in the stock. He believes that Micron is undervalued and primed for further growth, particularly as it benefits from the booming demand for AI-driven memory solutions.
In this article, we’ll break down why Micron is a solid buy as it heads into its next earnings report, highlighting the key factors driving its growth and the potential risks investors need to consider.
Micron’s Rollercoaster Ride in 2024
Micron’s stock had a wild ride in 2024, with dramatic ups and downs. Early in the year, it soared by 80% as investors were excited by the company’s strong performance in the wake of increased demand for memory chips, especially from the AI sector. However, the stock later experienced a pullback, driven by concerns about market saturation and high valuations. This retreat left many wondering whether Micron could continue its momentum.
Despite the challenges, Micron’s stock remained up around 15% for the year, thanks to a solid Q4 FY2024 performance. The company reported revenue of $7.75 billion for the quarter, a remarkable 93% year-over-year increase, with annual revenue hitting $25.1 billion. These strong results proved that Micron was still on track for growth, and it helped to bolster investor sentiment as the company prepares for its Q1 FY2025 earnings report.
Investor Sentiment and Micron’s Strong Position
Investor sentiment towards Micron is largely positive. Victor Dergunov, a top investor ranked in the top 4% of stock professionals on TipRanks, has been particularly bullish. Dergunov sees Micron as a strong buy into its upcoming earnings report, noting that the company is currently undervalued. He attributes this optimism to Micron’s robust performance in AI and its competitive position in the memory chip market.
With the growing demand for memory in AI applications, mobile phones, and data centers, Micron stands to benefit immensely. Dergunov believes that Micron’s ability to supply these markets with high-performance memory chips gives it a strong edge over its competitors.
Victor Dergunov’s Take on Micron Stock
Victor Dergunov is no stranger to successful stock picks, and his analysis of Micron is one that many investors are paying attention to. According to Dergunov, Micron’s stock is currently trading at an attractive valuation, and its robust growth prospects make it a solid investment. He highlights the company’s dominance in the memory market, particularly for AI applications, and believes that Micron is positioned for significant upside.
Dergunov points to the company’s strong track record of exceeding earnings expectations and forecasts that Micron’s Q1 FY2025 earnings could surpass analysts’ predictions. With demand for memory solutions continuing to rise, Micron’s prospects appear bright for the remainder of 2024 and into 2025.
Micron’s Impressive Q4 FY2024 Performance
Micron’s Q4 FY2024 earnings were nothing short of impressive. The company posted a revenue of $7.75 billion, which marked a 93% increase compared to the same period in the previous year. This strong performance was driven by a surge in demand for memory chips, particularly from the AI and data center sectors.
Micron also provided optimistic guidance for Q1 FY2025, forecasting a revenue increase of around 4.6% from the previous quarter. This is a significant boost for investors, as it shows that the company’s growth trajectory is likely to continue.
Also read: Witcher 4 Reveals Ciri as Playable Hero at The Game Awards
Q1 FY2025: What’s Expected?
As Micron prepares to announce its Q1 FY2025 earnings, analysts are expecting strong results. The company is forecasting a revenue range of $8.7 billion, which represents a significant increase from the $4.73 billion reported in Q1 FY2024. This could indicate a year-over-year sales growth of around 85%, which would be a major win for Micron.
Dergunov’s prediction of a beat on earnings estimates further boosts investor confidence. If Micron continues to exceed expectations, the stock could see a significant boost in the coming months.
The Role of AI in Micron’s Growth
One of the primary drivers of Micron’s growth is the booming demand for AI applications. As AI becomes more prevalent in industries ranging from mobile phones to data centers, the need for high-performance memory chips has skyrocketed. Micron, with its advanced DRAM and NAND products, is positioned to meet this demand.
The company’s revenue from its key segments, including compute and networking, mobile, and storage, has seen significant increases, driven largely by AI adoption. For example, its compute and networking segment grew by 152% year-over-year, while its mobile segment saw a 55% increase in revenue.
Micron’s Competitive Advantage in the U.S.
Micron’s position as the dominant memory chipmaker in the U.S. gives it a competitive advantage, particularly in the face of potential geopolitical risks. The company is poised to benefit from potential tariffs that could make it more difficult for foreign memory chipmakers to compete in the U.S. market. As a result, Micron could see increased demand for its products domestically, further boosting its revenue.
Financial Forecast and Micron’s Stock Valuation
Looking ahead, Dergunov projects that Micron’s earnings per share (EPS) will reach around $9 in fiscal 2025, which would put the company’s price-to-earnings (P/E) ratio at an attractive 10-11. This makes Micron’s stock undervalued compared to its future growth prospects.
The consensus among analysts is also bullish, with Micron receiving a consensus “Strong Buy” rating from Wall Street. The stock’s 12-month average price target is $149.81, which implies nearly 47% upside potential from its current price.
Risks to Consider with Micron Stock
While the outlook for Micron is largely positive, there are risks to consider. These include increased competition from other memory chipmakers, especially those from China, as well as potential geopolitical and macroeconomic risks. Additionally, if demand for AI or data center memory slows, it could impact Micron’s growth.
Investors should be mindful of these risks when considering whether to invest in Micron.
Micron’s Future Potential in the Semiconductor Market
Looking further into the future, Micron has a strong growth trajectory ahead of it. As demand for memory chips continues to rise, especially in the AI sector, the company is well-positioned to capture a larger share of the market. Financial forecasts suggest that Micron’s revenue could grow significantly in the coming years, with its stock price potentially reaching $140-150 within the next year.
Should You Buy Micron Stock Now?
If you’re considering investing in Micron, now could be an excellent time. The company’s strong Q4 performance, positive guidance for Q1 FY2025, and dominant position in the AI-driven memory market all point to continued growth. Furthermore, the stock is currently undervalued, which makes it an attractive buy for long-term investors.
Also read: Get Up to $1,500 Fast: Jackson Hewitt Holiday Loan Explained
Conclusion
Micron Technology is in a strong position as it heads into its Q1 FY2025 earnings report. The company’s dominance in the memory chip market, especially for AI applications, makes it a compelling investment. Despite some risks, Micron’s future growth potential is significant, and its stock appears undervalued at the moment. If you’re looking for a solid long-term investment, Micron could be an excellent choice.
FAQs
What factors are driving Micron’s growth in 2024?
Micron’s growth is primarily driven by the increasing demand for memory chips in AI applications, mobile devices, and data centers.
How does Micron’s performance in Q4 FY2024 affect its outlook?
Micron’s strong Q4 performance has boosted investor confidence, indicating that the company is on track for continued growth.
What role does AI play in Micron’s future?
AI is a major driver of Micron’s growth, as the technology requires advanced memory chips for data processing and storage.
What are the main risks associated with investing in Micron stock?
Risks include increased competition, geopolitical tensions, and potential slowing demand for memory chips.
What is the predicted stock price target for Micron in the next year?
Analysts have a 12-month average price target of $149.81, which represents a potential 47% upside.