Chipmaker Micron (MU) is set to release its first quarter earnings this week.
MU – Daily Chart
MU shares have been trading in a range from $85 to $111 and the upcoming earnings could make or break the recent upside. This will determine whether we see a breakout higher, or a potential correction back to the support.
Micron Technology releases an update after the market closes Wednesday, with analysts taking a bullish stance on the chip maker’s stock. All but one of the 15 analysts who follow the company have a “buy” rating on the firm, with an average price target of roughly $142, which is 40% above Friday’s closing price of $102.50.
Wall Street analysts predict Micron will report revenue of $8.72 billion, 84% higher year-over-year, with a profit of $1.84 billion, compared to a loss of $1.23 billion a year earlier. The company’s Q1 results also come one week after the company was awarded a federal grant of up to $6.165 billion to make semiconductors in the U.S.
Rising AI investments and Micron’s strategic partnerships with tech giants should see continued success. The company also helps AMD and Nvidia with their own developments. Micron’s management mentioned that Q2 is often a slower period for the company, while the first quarter of the calendar year tends to be weaker for the industry.
That brings the risk of slow earnings growth over the next two quarters but analysts will be focused on underlying tailwinds from AI investment. Micron’s benefit is that it operates in the DRAM semiconductor technology, which is a different product from Nvidia’s GPUs and the two are not in direct competition for revenue. Micron can benefit from continued big tech investment into semiconductors and also from a new PC cycle if consumers seek to upgrade to AI-compatible hardware.
