"1,850% surge is just a preview"...Micron (MU) targets $2,200 amid AI shortage

▲ Micron Technology (MU), Artificial Intelligence (AI)/AI-generated image

Micron Technology (MU) has surged by approximately 700% in the past year, yet Wall Street has issued a bold forecast, suggesting there's still 126% upside potential. If the target price of $2,200 materializes, its market capitalization could swell to approximately $2.5 trillion, potentially elevating it to the world's 6th largest listed company.

According to Nasdaq, a U.S. economic media outlet, on July 6 (local time), Melius Research analyst Ben Reitzes set Micron's target price at $2,200. Reitzes initiated coverage of Micron on April 27 with a $700 target, then raised it to $1,100 on May 18, and again doubled it to $2,200 on June 25. This implies an upside potential of approximately 126% compared to the closing price on July 2.

If the target price of $2,200 is reached, Micron's market capitalization would grow to approximately $2.5 trillion. This scale could surpass companies like Taiwan Semiconductor Manufacturing (TSM), SpaceX, and Broadcom (AVGO). Micron's stock price has surged by about 700% over the past year, and by 1,850% since early 2023 when AI-related stocks began their significant rally.

At the heart of Wall Street's optimism is the shortage of memory for AI data centers. Micron is the only major U.S. memory manufacturer that supplies NAND flash, Dynamic Random Access Memory (DRAM), and High Bandwidth Memory (HBM). HBM is stacked with Graphics Processing Units (GPUs) to support large language model training and ultra-high-speed data transfer in AI data centers. In the same week Reitzes raised his target price to $2,200, Micron announced it had secured long-term memory supply contracts worth approximately $100 billion.

However, warnings have also emerged that the AI frenzy has been reflected in stock prices too quickly. Article author Sean Williams pointed out, "No world-changing technology in the last 30 years has escaped an initial bubble collapse." He explained that it takes considerable time for companies to translate the effects of adopting new technologies into actual sales and profit growth, and even the internet took over five years for companies to optimize their usage after the dot-com bubble burst.

Micron is leveraging large-scale long-term contracts and memory supply shortages to somewhat mitigate the risks of cyclical fluctuations that have pressured memory companies for decades. Conversely, historical warnings remain that an initial bubble collapse could recur as AI technology matures. Thus, Wall Street's ultra-bullish outlook surrounding the $2,200 target price is contending with concerns about AI overheating.

[Article Key Summary]

-Melius Research raised Micron's target price to $2,200, suggesting an upside potential of approximately 126% compared to the July 2 closing price.

-Upon achieving the target price, Micron's market capitalization would grow to approximately $2.5 trillion, potentially surpassing Taiwan Semiconductor Manufacturing, SpaceX, and Broadcom.

-Long-term memory supply contracts worth approximately $100 billion and AI memory shortages support the bullish outlook, but the possibility of an initial technology bubble collapse has also been warned.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*