Stock of Micron Gets New Buy Call After It's Deemed Another Chip-sector Ai Play

In the rapidly evolving landscape of the chip sector, Stifel analyst Brian Chin has identified Micron Technology Inc. as a prominent contender in the artificial intelligence (AI) frenzy. In a recent note to clients, Chin upgraded Micron's memory-chip stock from hold to buy, emphasizing the company's strategic positioning in what he deems a more favorable and early expansion phase.

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Chin highlighted Micron's movement through the optimal phase for garnering favorable multiples, attributing this to the company's active engagement with AI and high-bandwidth memory. Micron, a provider of dynamic random-access memory (DRAM), is capitalizing on a clear dual benefit by converting DRAM wafer capacity to high-bandwidth memory.

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The catalyst for this bullish sentiment includes Micron's recent announcement of the commencement of initial volume shipments of its High Bandwidth Memory 3E (HBM3E) solution. This product is set to play a significant role in Nvidia Corp.'s product ramp for its H200 chip, marking a strategic collaboration in the high-growth AI sector.

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Chin expressed confidence in Micron's trajectory, citing the positive confirmation that the company is on track to achieve its revenue targets from HBM by the second half of calendar year 2024. This move aligns with Micron's commitment to strengthening its position in the AI space and high-performance computing.

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Within the realm of companies deemed "AI relevant," Micron's shares, according to Chin, present a compelling investment opportunity, supported by their valuation relative to growth expectations. The analyst pointed out that the broader demand for electronics has yet to fully strengthen, but the tightening of DRAM supply, coupled with its anticipated recovery into the 90s by mid-year, adds to the attractiveness of Micron's prospects.

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Chin's bullish outlook is further emphasized by his decision to boost Micron's price target from $80 to $120 in his report. This adjusted target represents a notable 25% upside potential from Wednesday's closing price. The market responded positively to the news, with Micron's stock experiencing a 3% increase in Thursday morning trading.

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As the AI craze continues to reshape the tech landscape, Micron Technology stands out as a key player, strategically positioning itself to capitalize on the growing demand for high-performance memory solutions. Chin's endorsement further solidifies Micron's status as a compelling investment opportunity in the dynamic and competitive chip sector, offering investors a promising outlook for the future.

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