We recently published a list of 10 Trending AI Stocks to Watch for the Rest of 2024. Since Micron Technology Inc (NASDAQ:MU) ranks 7th on the list, it deserves a deeper look.
Chris Hyzy, Merrill & Bank of America Private Bank chief investment officer, said while talking to CNBC in a latest program that there is “ a lot of momentum” behind the market rally. The analyst said that to gauge how much momentum we have behind the optimism, we need to analyze the “wedge” in the market.
“The biggest wedge that was in the market last year and in 2022 was inflation. That’s beginning to go away. It’s almost to the fact that no one’s is talking about whether or not we are going to have inflation that’s worrisome.”
Hyzy said that the Fed easing its fiscal policy and now China “joining the party” will be two key tailwinds for the market.
Answering a question about the hard landing vs soft landing debate, the analyst said we should look beyond the two possibilities as he believes there are many other scenarios to consider in between these two outcomes.
“We have a lot of components of a soft landing. I’d like to say it’s more of a mid-cycle slowdown with easier financial conditions that should actually create a profit revision to the upside not downside,” Hyzy added.
For this article we picked top 10 trending AI stocks on the back of latest news and analyst ratings. With each company we have mentioned the number of hedge fund investors. 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).
Micron Technology Inc (NASDAQ:MU)
Number of Hedge Fund Investors: 120
Micron Technology Inc (NASDAQ:MU) shares are trending after the company posted strong quarterly results and bullish guidance.
Micron Technology’s (NASDAQ:MU) guidance showed the artificial intelligence boom is more than offsetting consumer weakness.
Micron Technology Inc (NASDAQ:MU) specializes in manufacturing memory solutions, particularly DRAM and NAND, essential for computing and electronic devices. Its products play a vital role in data centers, mobile devices, and various other sectors.
During the last quarter, Micron Technology Inc (NASDAQ:MU) saw record revenues for NAND and storage business units, fueled by robust demand in the data center and automotive industries.
However, Micron Technology Inc (NASDAQ:MU) faces stiff competition in a sector characterized by a narrow “moat.” Major competitors like Samsung and SK Hynix also boast comparable technological expertise, intensifying price wars and cyclical oversupply issues that can significantly impact profitability and cause substantial fluctuations in Micron Technology Inc (NASDAQ:MU)’s valuation.
Micron Technology Inc (NASDAQ:MU) has $4 billion in net debt when accounting for its long-term marketable securities. Yet, Micron Technology Inc (NASDAQ:MU)’s guidance suggests a promising outlook, projecting nearly 40% non-GAAP gross margins. This robust margin profile mitigates many concerns raised by skeptics. For fiscal Q1 2025, Micron Technology Inc (NASDAQ:MU)’s non-GAAP projections indicate earnings of around $1.80 per share.
Despite ongoing uncertainties regarding its ability to sustain these profit margins and questions about its competitive advantages, Micron Technology Inc (NASDAQ:MU)’s valuation remains appealing. Without needing substantial acceleration in its core operations, Micron Technology Inc (NASDAQ:MU) could easily achieve $9 in non-GAAP EPS for fiscal 2025, placing its stock at a price-to-earnings ratio of 12 times this year’s non-GAAP EPS—an attractive figure.
Parnassus Value Equity Fund 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, Micron Technology Inc (NASDAQ:MU) ranks 7th on Insider Monkey’s list titled 10 Trending AI Stocks to Watch for the Rest of 2024. While we acknowledge the potential of Micron Technology Inc (NASDAQ:MU), 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.