We recently published a list of the 8 Best Long Term Tech Stocks To Invest In Now. In this article, we are going to take a look at where Micron Technology, Inc. (NASDAQ:MU) stands against the other best long term tech stocks to invest in.
The technology sector came to the market’s rescue in 2023 after the disastrous macroeconomic conditions of 2022. Investments in advanced technologies like generative AI continue to show strong potential for future business growth.
According to CNBC’s Q3 CFO Council survey, 48% of the CFOs said that the tech industry’s growth will outperform all other sectors over the next six months. Moreover, in a September 23 interview with CNBC, Investment Management Partner at Callan Family Office, RaeAnn Mitrione highlighted that the tech sector has been a major beneficiary of the recent Fed rate cut. Lower interest rates are favorable for tech companies, which often thrive in such environments.
The ongoing AI theme has also been a key driver of tech’s strong performance. Additionally, she mentioned that mega-cap tech stocks were previously seen as a safe haven during economic uncertainty, but as the rate environment shifts, the focus may broaden to include smaller, more economically sensitive sectors. Nonetheless, tech’s strong momentum, fueled by AI, is likely to persist for some time.
Optimism in Global Tech Spending for 2024
According to Deloitte’s 2024 technology industry outlook, global tech spending slowed due to high interest rates, economic concerns, and geopolitical issues in 2023. However, optimism is growing for 2024, with projected global IT spending growth of 5.7% to 8%. Some of the growth areas include software, IT services, and AI investments, with AI spending potentially reaching $200 billion by 2025. Cloud computing and cybersecurity are also expected to see strong demand.
The report states that Gen AI is gaining traction but it is expected to grow modestly in 2024, yet more strongly in 2025, with its integration into software and business processes driving productivity and efficiency. AI hardware demand is set to exceed $50 billion next year, while companies continue exploring AI monetization strategies.
Harnessing AI for Greater Energy Efficiency
Additionally, the growing influence of big tech companies and the increasing reliance on AI have led to a significant rise in energy demand. We discussed this in our article about the 13 Best Big Tech Stocks To Buy Now. Here is an excerpt from the article:
“A recent notable trend that people have begun to see because of the rise of big tech companies and the growing use of AI is a greater demand for power. Many major tech companies are beginning to require more energy, with the AWS-owner going as far as buying a nuclear-powered data center for $650 million recently.
The primary driving force for this rising demand is the need to develop AI. Many energy-conscious investors may see this new trend as a red flag for big tech. However, Jensen Huang has noted that while AI takes a ton of energy to train, once developed and trained, it will also help save energy. He particularly noted that AI is going to become so advanced through this development that it will eventually end up offering solutions that can change the way we use energy, making our operations endlessly more energy efficient.”
While concerns about the electricity needed to power AI are justified, according to industry pioneers like Nvidia CEO Jensen Huang, the technology itself will help solve that problem.
Our Methodology
For this article, we used the Finviz stock screener to identify 27 tech stocks with market caps of above $10 billion, Buy or Buy-equivalent ratings from analysts, and over 20% average price target upside. We narrowed our list to 8 stocks with the highest average analyst price target upside as of September 26. The best long term tech stocks are listed in ascending order of their average analyst price target upside.
We also mentioned the hedge fund sentiment around each stock which was taken from Insider Monkey’s database of over 900 elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Is Micron Technology, Inc. (NASDAQ:MU) the Best Long Term Tech Stock To Invest In Now?
Micron Technology, Inc. (NASDAQ:MU)
Average Analyst Price Target Upside: 36.51%
Number of Hedge Fund Holders: 120
One of the best long term tech stocks, Micron Technology, Inc. (NASDAQ:MU) is a well-known supplier of advanced memory and storage solutions that play an important role in various applications, including computers, smartphones, servers, and data centers.
The company’s ability to innovate and manufacture state-of-the-art memory products has been a key driver of growth in the digital economy. It specializes in several types of memory, including DRAM (Dynamic Random Access Memory), NAND flash, and NOR flash, which are integral components in a vast range of technology products, from personal devices to enterprise-level infrastructures.
The company’s products are widely recognized for their high performance, reliability, and energy efficiency, making them essential in today’s tech landscape. Beyond its core memory offerings, it provides a range of services designed to support customers throughout the product lifecycle. These include design and development assistance, comprehensive testing and validation, and effective supply chain management solutions.
The company recently reported its fiscal fourth-quarter earnings on September 25 and it surpassed analyst expectations. Revenue for the quarter reached an impressive $7.8 billion, a remarkable 93% increase compared to the same period last year.
Adjusted EPS soared to $1.18, a significant recovery from an adjusted loss of $1.07 in the previous year. The results not only beat forecasts but also showed a strong turnaround for Micron Technology, Inc. (NASDAQ:MU).
The guidance provided for the upcoming quarter projects revenue of $8.7 billion and adjusted earnings of $1.74 per share, both of which exceed analyst predictions of $8.32 billion and $1.52 respectively.
Much of this success can be attributed to the ongoing demand for high-bandwidth memory chips, especially in AI computing platforms. CEO Sanjay Mehrotra emphasized the company’s optimistic outlook in the fiscal Q4 press release, forecasting record revenue for fiscal Q1 and substantial growth in profitability for fiscal 2025. The positive guidance indicates not only a strong current performance but also a promising trajectory for the future.
Additionally, the stock has a Strong Buy rating from 42 analysts. As of September 26, the average price target of $150.00 implies an upside of 36.51% from current levels.
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.”
Overall, MU ranks 6th on our list of the best long term tech stocks to invest in. While we acknowledge the potential of 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.
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Disclosure: None. This article is originally published at Insider Monkey.
