(Bloomberg) — Micron Technology Inc.’s $62 billion rise, powered by artificial intelligence, is about to be tested on whether it has gone too far, too fast.
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Shares of the chipmaker are up 65% this year. Much of this advance has occurred since Micron’s last quarterly report, with the stock hitting a record high this month. Investors will look for evidence of earnings growth and strong future demand in the next expected release after the market closes on Wednesday.
Expectations are high. Wall Street expects Micron to report revenue of $6.7 billion in the quarter, up nearly 80% from the same period a year earlier. A failure could increase the risk of a selloff, with options contracts signaling the stock could move 12% in either direction in the post-earnings trading session, according to data compiled by Bloomberg.
“Micron has benefited from the artificial intelligence phenomenon,” said Jay Woods, chief global strategist at Freedom Capital Markets. “They’re really going to need to have a story that sets them apart from their peers.” »
Where Micron stands out is in its memory capabilities, used in AI applications, which Wall Street believes will generate future revenue. Analyst estimates for quarterly adjusted earnings per share are up 9.5% over the past three months, to $0.50.
“We expect Micron to perform a beat-and-raise as we enter one of the largest memory cycles in history,” Hans Mosesmann of Rosenblatt Securities Inc. wrote in a Tuesday note. This growth will be driven by factors such as demand for artificial intelligence applications and a rise in high-bandwidth memory chips which, in turn, reduce the supply of traditional dynamic random access memory components , he added.
At $225, Mosesmann’s price target for Micron is the highest on Wall Street, according to data compiled by Bloomberg. The company overall has 37 buy ratings, two hold ratings and one sell rating.
Still, if there’s a disappointment, any potential post-earnings weakness could be a good time to buy stocks, according to JPMorgan Chase & Co. analysts led by Harlan Sur.
“We would use any near-term pullback in the stock to continue accumulating shares,” the analysts wrote in a June 24 note, adding that they see the memory segment’s current recovery pushing the stock higher from current levels to $190 to $200 per share.
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Nvidia Corp. shares surged 6.8% on Tuesday, their best one-day gain since late May, ending a three-day losing streak that erased more than $400 billion in stock market value.
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Earnings expected Wednesday
–With the help of Subrat Patnaik.
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