Why Micron Technology Stock Trounced the Market Today

Key Points

• In an update on semiconductor and affiliated stocks, a researcher singled out the memory specialist.

• It feels the company has particularly strong potential in one hotly growing customer segment.

• 10 stocks we like better than Micron Technology ›

An upbeat analyst note on the looming future of the semiconductor industry and associated components makers, a researcher flagged Micron Technology (NASDAQ: MU) as being a particularly undervalued title in that grouping. Following that, investors pounced on the chipmaker's stock to leave it with a nearly 3% price gain on the day. That was well above the 0.3% rise of the S&P 500 index.

Singled out as a star

The researcher in question was Stifel, which covered a clutch of stocks in that new report. It devoted quite a bit of ink to Micron, suggesting the stock had notable upside despite zooming almost 57% higher year to date in price.

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According to reports, Stifel intimated that the hyped-up hyperscaler customer segment has even more potential than many realize. Forecasts for the segment indicate very robust growth in hyperscalers, which are set to be the workhorses of the artificial intelligence (AI) revolution.

Stifel said that most of Micron's revenue derives from the data center space. This is beneficial for both revenue and profitability; the researcher pointed out that this business boasts gross margins of close to 50% for the company.

Finally, Stifel wrote, the outlook for memory pricing by the end of this year is looking more optimistic than previously.

Impressive forward growth numbers

That new take on Micron jibes with the generally optimistic tone of most analyst views these days. Collectively, the prognosticators tracking the stock are modeling sales growth of 48% this year over 2024, with per-share net income rising more than sixfold to $8.08.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.