Micron Technology (NASDAQ:MU) shares rose nearly 2% in pre-market trading on Monday as Deutsche Bank upgraded the stock, citing “inflecting fundamentals” in the start of the semiconductor cycle.
Analyst Sidney Ho raised the firm’s rating on Micron (MU) shares to buy from hold, noting that prices have started to improve due to recent strength for artificial intelligence servers, which have fueled the growth of high-bandwidth memory and DDR5.
“Our recent checks with the supply chain suggest that the price increases are sustainable and should accelerate in the next two quarters given the limited supply growth,” Ho wrote in an investor note.
Ho pointed out that there has been a recent strengthening in dynamic random access memory prices, which could be the beginning of an upcycle. “We note that, historically, memory upcycles lasted 4-6 quarters,” Ho added.
The analyst also said there could be further appreciation in Micron’s (MU) shares as estimates increase and the valuation multiple expands.
Analysts are largely cautious on Micron (MU). It has a HOLD rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha’s quant system, which consistently beats the market, rates MU a HOLD.