Micron Stock Has 47% Upside per Wall Street Analyst. Here’s How

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Shares hard to believe that shares of memory darling Micron (NASDAQ:MU) still have any gas left in the tank after an explosive run that saw a 223% gain year to date or 590% in the last two years. It’s been a parabolic rise, but the terrain has gotten a little bit rougher since June began. When it comes to buying the dip, it’s harder to do when such a dip of 5-10% is barely visible on the two-year chart.

Either way, there are some notable bulls on Wall Street who still view Micron as having rally fuel. Just how much? The price target currently at $1,500 per share suggests a 47% gain from here. The hot target belongs to the analysts over at TD Cowen, who outlined CPU strength running through the end of next year (rather than just the first half).

Undoubtedly, TD Cowen’s upgrade was a big one, but it’s notable, especially given how much AI data centers are feasting on DRAM. At this pace, it’s hard to imagine a climate where there’s enough DRAM to go around such that firms or consumers don’t have to pay a hefty price of admission.

For Micron, long-term agreements (LTA) might be the bull signal that causes other analysts to raise the bar aggressively on their own price targets. I’d be inclined to agree. If you want DRAM, it’s far better to get the orders in as early as possible before the shortage has a chance to extend any further.

A structural boom in memory could always be possible

Also, it sounds like they view the AI boom as more structural than cyclical. The great structural versus cyclical debate in the semiconductor names has been quite the topic of late. And while the stakes are quite high and it’s painful for a value investor to buy after a parabolic run, it is sometimes all right to look past the chart and towards the future because, at the end of the day, that’s what really matters.

For value seekers, Micron’s stock chart might look nasty, but given the dynamics in play, I do think TD Cowen and other bulls have a higher chance of being right than wrong. If the dot-com bust taught investors anything, it’s to be skeptical whenever one claims that the paradigm has shifted and things are different. But what if things really are different? And what if there are no historical parallels to compare to?

It’s a tough call. But I think that nibbling into a red-hot name, like Micron, could make a bit of sense, provided you’re prepared for the downside that could come if the AI boom’s memory supercycle is exactly just that: a cycle.

The valuation actually makes sense

Micron’s earnings are on tap in a week, and there’s sure to be volatility before, during, and after the quarterly reveal. Given the likelihood that Micron’s impressive margins and sales growth have more room to last (and maybe the window will just keep getting pushed out), an 11.0 times forward price-to-earnings (P/E) multiple might be real value rather than a symptom of a cyclical trap.

Of course, despite the meteoric rise, it still feels like the cyclical nature of DRAM and its history as a commodity is holding the stock back. What could change that? Time will tell, but the firm seems to be moving very prudently, chipping away at debt, rather than pouring cash on an expansion that might not make an impact until some years later, when it’s unclear where the AI revolution will be and if DRAM needs will have finally been met.

In my view, Micron might be a value stock disguised as a dangerous momentum stock and cyclical play nearing its peak. The peak might not be close. And if the boom is structural, perhaps there might not be one this time around, at least not to the magnitude of past cyclical busts. Sure, it’s risky to deem that things are different this time, especially for a $1.15 trillion company that’s already had its moment in the spotlight. But, then again, high rewards tend to accompany high risks.

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