1. Micron Technology, Inc. (NASDAQ:MU)
FWD PE Ratio: 12.11
1-Month Stock Price Performance: 12.45%
Number of Hedge Fund Holders: 120
Micron Technology, Inc. (NASDAQ:MU) is a leading provider of advanced memory and storage solutions that are essential across various applications, including computers, smartphones, servers, and data centers. It tops our list of cheap rising stocks to invest in.
The company has established itself as a key player in the digital economy through its manufacturing of memory products such as DRAM, NAND flash, and NOR flash. These memory types are important components found in a wide array of technology products, from personal devices to large-scale enterprise systems.
Additionally, the company improves upon its offerings with services that support customers throughout the product lifecycle, including design assistance, comprehensive testing, and effective supply chain management.
120 hedge funds held stakes in Micron (NASDAQ:MU) in the second quarter, with positions worth $5.164 billion, according to Insider Monkey’s database. With nearly 3.68 million shares of the company, valued at $483.96 million, Two Sigma Advisors is the largest shareholder of the company, as of June 30.
The company has provided guidance for the upcoming quarter that suggests revenues of $8.7 billion and adjusted earnings of $1.74 per share, both of which surpass analyst expectations. The promising forecast points to a strong demand for high-bandwidth memory chips, particularly within AI computing platforms.
CEO Sanjay Mehrotra has expressed confidence in the company’s outlook, as the management expects record revenues for the first fiscal quarter and significant profitability growth for fiscal 2025. Recent analyses from firms like Raymond James and Baird signify the market’s optimism regarding the company.
On September 26, Raymond James raised the price target on it to $140 from $125 and reiterated an Outperform rating. The firm noted that both the Q4 results and the Q1 outlook exceeded expectations, which alleviates concerns about the memory cycle’s downturn.
Factors contributing to improved margins include pricing strategies, a favorable high-bandwidth memory mix, and better manufacturing yields, all of which are anticipated to persist throughout the year.
Meanwhile, on September 27, Baird adjusted its price target to $150 from $172 on Micron (NASDAQ:MU) but maintained an Outperform rating. The firm emphasized that its share of high-bandwidth memory is expected to match its overall DRAM market share by 2025.
The aspect is crucial to Baird’s investment thesis, as high-bandwidth memory is projected to yield gross margins in the low 60s and a compound annual growth rate of 60%. This potential remains largely untapped in the current valuation, making the company an attractive investment opportunity.
Parnassus Investments stated the following regarding Micron Technology, Inc. (NASDAQ:MU) in its Q2 2024 investor letter:
“Micron Technology, Inc. (NASDAQ:MU) posted fiscal third-quarter results that met expectations. Micron’s DRAM (dynamic random access memory) and NAND (non-volatile storage technology) segments grew revenue strongly, continuing the company’s recovery from a cyclical downturn last year. We believe Micron is well positioned to capitalize on AI-driven demand for greater memory.”
While we acknowledge the potential of Micron Technology, Inc. (NASDAQ:MU) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than MU but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
Read Next: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure. None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and investors. Please subscribe to our daily free newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
