MU Nears Breakout as Analysts Continue to Pound the Table

Key Points

• Micron Technology's (MU) shares have surged over 40% year-to-date, outperforming the overall market and semiconductor sector.
• The company announced impressive second-quarter results, beating estimates and providing optimistic outlooks.
• Analysts are bullish on MU, with recent notable upgrades and price target increases.

Shares of Micron Technology NASDAQ: MU, a leading provider of storage-focused microchip products worldwide, are having a year to remember. MU has surged over 40% year-to-date, significantly outperforming the overall market and its semiconductor sector, up 27% during the same period. 

Notably, Micron Technology possesses an increasingly bullish sentiment. The stock is one of the most followed names and a favorite amongst analysts, earning it a spot on the top-rated list and most upgraded stocks list. 

After posting an impressive earnings beat in March, the stock has spent several months consolidating above rising key moving averages, forming a bullish consolidation. So, let’s unpack the bullish sentiment further and take a closer look at the current setup in MU, which appears to have more upside.

Micron Earnings Beat and Impressive Guidance

Micron's shares surged 14% following the announcement of its second-quarter fiscal 2024 earnings. The company surpassed analysts' expectations and offered optimistic future outlooks. The company attributed much of its success to the AI boom. 

Micron reported a significant increase in revenue from $3.69 billion to $5.82 billion compared to the same quarter last year, alongside a remarkable turnaround in net income, shifting from a $2.3 billion loss to a $793 million profit. Looking ahead, Micron anticipates third-quarter revenue to reach $6.6 billion, surpassing analysts' projections of $6.02 billion. 

CEO Sanjay Mehrotra highlighted Micron's pivotal role in the semiconductor industry's AI-driven growth, emphasizing its provision of essential memory and storage solutions for computers, data centers, and phones. 

While Nvidia may hog the AI limelight with its GPUs, Micron quietly thrives by supplying the backbone memory and storage infrastructure for these systems. It mainly benefits from the demand surge in large data centers powering the influx of new AI software.

Analysts Pound the Table on MU

There’s a reason why MU finds itself as one of the top-rated stocks. Twenty-six analyst ratings have rated the stock as a buy, earning it a consensus analyst rating of moderate buy. Over the previous years, each quarter, more and more analysts moved over to the “buy” rating as the stock continued to impress. This time, one year ago, the stock had twenty-four buy ratings, five hold ratings, and two sells.

Equally as impressive, is the sheer scale of recent analyst price target increases and upgrades for the stock. Within the past month, six analysts have made notable changes to MU. Most recently, analysts at Robert W. Baird upgraded the stock to outperform and boosted its price target significantly from $115 to $150. Analysts at Cantor Fitzgerald boosted its target from $135 to $150, and KeyCorp followed suit, also increasing its target to $150 from $135. At the beginning of April, analysts at Bank of America raised its price target to $144 from $120, which forecasted almost a 15% upside for the stock at the time of the report. 

And it’s not just analysts that are bullish on the name. Institutions continue to purchase shares of Micron. Over the previous twelve months, institutional net inflows have taken the institutional ownership in MU to an impressive 80.8%. During that period, total institutional inflows have been $9.4 billion versus $7.1 billion in total outflows. 

MU Looks Set to Breakout

As the stock continues to impress fundamentally, from a technical perspective, it’s shaping up in the same fashion. After correcting in April, the stock has regained its footing and reclaimed all major moving averages. The bulls will want to see MU continue to consolidate above its rising 20-day Simple Moving Average (SMA), near $120, as it builds a base before beginning the next leg higher. Now, with the stock only 7% away from its 52-week highs, that next leg higher could see it reach new heights.