1 Stand-Out Growth Stock to Buy Now for 80% Upside Potential

Globe and Mail

14-03-2025

With a market cap of $105.7 billion, Micron Technology (MU) is a leading semiconductor company focused on memory and storage solutions. The company develops and manufactures DRAM, NAND flash, and high-bandwidth memory (HBM) solutions. These are used in data centers, artificial intelligence (AI), high-performance computing, smartphones and personal computers, and automotive applications. Micron's stock has gained 19.5%, outperforming the Nasdaq Composite Index's ($NASX) dip of 9% so far this year.
Micron's leadership in HBM and DRAM positions the company well to capitalize on the growing demand for AI and data center applications. In the first quarter of fiscal 2025, which ended on Nov. 28, 2024, total revenue increased 84% year-over-year to $8.7 billion, driven by AI demand. Adjusted net income was $1.79 per share, up from a loss of $0.95 per share in the previous year. In the quarter, data center revenue accounted for more than 50% of total revenue. Management expects long-term demand growth in data centers, with NAND serving as a key enabler for AI workloads.
Micron expects consumer-oriented markets to be under pressure in the near term. However, a recovery is expected in the second half of fiscal 2025. Management expects Q2 revenue of $7.9 billion (plus or minus $200 million). This would represent a 35.7% increase from the second quarter of fiscal 2024. The company also expects adjusted profits of $1.43 per share, compared to $0.42 per share in the year-ago quarter.
Micron's cash, marketable investments, and restricted cash totaled $8.75 billion, with adjusted free cash flow of $112 million. As AI drives demand for advanced memory solutions, Micron's innovative product offerings are expected to play an important role in meeting these changing requirements.
What Are Analysts Saying About Micron Stock?
Recently, Wolfe Research analyst Chris Caso lowered the price target on MU stock from $175 to $150 while maintaining an ' Outperform' rating. This price reduction is due to Micron's lukewarm outlook, which was discussed at the Wolfe Auto, Auto Tech, and Semiconductor Conference. The company cited increased pricing pressure and unfavorable mix shifts as influencing its near-term outlook. However, management expects a recovery in the second half of its fiscal 2025, as inventory levels in PCs and smartphones improve.
While short-term pricing headwinds persist in both DRAM and NAND, Caso expects a second-half recovery fueled by AI-driven consumer device demand. Despite near-term challenges, Caso rates Micron as one of his top semiconductor picks.
Separately, Wells Fargo analyst Aaron Rakers reiterated his 'Buy' rating for Micron, citing strong growth prospects in high-bandwidth memory and data center demand. The company's growing HBM market share and upcoming product developments, including HBM4, strengthen its competitive position. Rakers believes there is a high risk, high-reward opportunity here.
Overall, on Wall Street, Micron stock has earned a 'Strong Buy' rating. Out of the 29 analysts covering MU, 24 rate it a 'Strong Buy,' two rate it a 'Moderate Buy,' two recommend a 'Hold,' and one rates it a 'Strong Sell.' The average target price f or the stock is $128.25, which is 30% above current levels. Plus, its Street-high estimate of $175 implies upside potential of nearly 80% over the next 12 months.
Analysts forecast fiscal 2025 sales to increase by 39.3% to $35 billion, followed by a 27.6% year-over-year increase in fiscal 206. Similarly, earnings could increase by 427.8% in fiscal 2025, followed by another 62.7% in fiscal 2026. Currently, Micron stock is trading at 3x forward sales and 13x forward earnings, which is cheap compared to peers in the semiconductor industry.