Stock in Micron Technology (NASDAQ: MU) had a fantastic run last year on the hopes that the company's improved financial performance would be a result of a more favorable market environment for memory chips
The majority of analysts believe the company is a good purchase, but Morgan Stanley is the only firm that has recommended selling Micron shares. The underweight rating was maintained by the firm, but a price target of $78 was recently raised, indicating a 17% decline from the current price.
Micron is likely to announce improved sales in its fiscal second-quarter update, which is scheduled for delivery on Wednesday, so the firm did acknowledge near-term upside possibilities.
Reasons why the majority of experts see Micron as a market leader previous quarter, Micron's sales was down slightly compared to the same period previous year, but the company is showing signs of improvement.
According to CEO Sanjay Mehrotra, generative AI is increasing the demand for server memory, and Micron's business will eventually benefit from the acceleration of AI solutions.
The company's profitability should be boosted in the near future thanks to improved pricing for these chips. It had a net loss of $1.2 billion in the quarter ended in November. Nonetheless, in line with management's projections, the Wall Street consensus forecast shows revenue growing steadily over the following year.
Even though Morgan Stanley's analysts are in agreement about Micron's commercial trajectory, they are mostly bearish on the company because to its valuation. Investors might be better off looking elsewhere, according to the analysts.
Despite this, Micron's forward price-to-earnings ratio is 6.8—quite low when compared to its trading history. The long-term potential for Micron stock could be enhanced if the company witnesses a surge in demand from AI servers.
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