Why Micron Stock Was Moving Higher Today

Key Points

• Micron gained in tandem with SK Hynix after Hynix released a new HBM chip.

• Memory chip makers tend to be subject to the same supply and demand trends.

• Micron could tack on more gains following its earnings report later this month.

• 10 stocks we like better than Micron Technology ›

Shares of Micron (NASDAQ: MU), the U.S.-based memory chipmaker, were moving higher today in sympathy with SK Hynix, the world's largest memory chip company, which hit an all-time high today after it announced the world's first HBM4 product.

Though SK Hynix is a competitor to Micron, the news was seen as a positive for the broader memory-chip industry, as it should spark more demand for HBM. It also comes during a week when artificial intelligence (AI) stocks have been flying higher after Oracle gave blowout guidance for cloud infrastructure growth earlier this year.

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Micron stock closed up 4.6% on the news.

Image source: Getty Images.

A rising tide in memory chips

SK Hynix, based on South Korea, jumped 7% today after it said this morning that it completed development of HBM4, its next-generation memory product for ultra-high performance AI.

Touting its capabilities, the company said that HBM4's bandwidth has doubled, and its power efficiency improved 40% compared with the previous generation. HBM4 marks its sixth generation of HBM.

While that development might be seen as bad news for Micron, the memory chip sector is subject to many of the same supply and demand trends. Micron has already sold out its HBM capacity for the year, so the news shouldn't have an immediate impact on its results, but it could help lift prices in the industry.

What's next for Micron?

Today's gain marks the second day in a row of upward momentum for Micron, as the stock moved higher yesterday after Citigroup raised its price target to $175 and reaffirmed its buy rating, noting that pricing for DRAM and NAND chips are trending higher.

Micron will report fiscal fourth-quarter earnings on Sept. 23, with analysts expecting revenue to jump 43% to $11.1 billion and for adjusted earnings per share to more than double from $1.18 to $2.85.

If the company tops those estimates, the stock could soar as Micron still looks cheap at a forward P/E of just 12.

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Citigroup is an advertising partner of Motley Fool Money. Jeremy Bowman has positions in Micron Technology. The Motley Fool has positions in and recommends Oracle. The Motley Fool has a disclosure policy.