As artificial intelligence (AI) adoption soars, the demand for memory chips follows suit. At the heart of this boom is Micron Technology, Inc. (MU), supplying critical DRAM and NAND chips that power AI servers, smartphones, and PCs. After struggling with inventory issues, Micron has seen its performance stabilize, buoyed by recovering prices and improved supply-demand dynamics.

The chip maker is set to release its fiscal 2025 first-quarter results on Wednesday, Dec. 18, after the market closes, with expectations that demand for memory chips - especially for AI workloads - will give its revenue a solid boost.

Despite a lackluster six months of stock performance, analysts are bullish, projecting double-digit upside for this dividend-paying semiconductor leader. To that end, should investors scoop up shares, lock in profits, or hold steady ahead of Micron's earnings? 

About Micron Technology Stock

Micron Technology, founded in 1978, stands at the forefront of memory and storage innovation. With a $114.2 billion market cap, it crafts cutting-edge DRAM, NAND Flash, and SSDs that power everything from smartphones to AI-driven data centers.

As AI adoption accelerates and 5G grows, Micron’s role in providing high-demand semiconductors is more evident than ever. Despite the cyclical nature of the industry, Micron continues to ride the wave of technological evolution, ensuring its place as a semiconductor leader in the digital age.

Despite a steep pullback from their June highs, shares of Micron have surged 33.6% over the past 52 weeks, outperforming the iShares Semiconductor ETF’s (SOXX) 20% gains.

Micron Technology’s 27.5% rise in 2024 has not exactly set the market ablaze, but that is a win for investors eyeing a solid AI stock at a bargain. Priced at 11.82 times earnings, Micron Technology trades at a discount to many of its large-cap semiconductor peers and also its five-year average of 84.19x, making it an attractive value play.

Moreover, Micron’s commitment to shareholder returns further strengthens its appeal. On Oct. 23, the chipmaker paid its shareholders a quarterly dividend of $0.115 per share. The tech-hardware innovator offers an annualized dividend of $0.46 per share, resulting in a yield of 0.4%. 

Micron Technology Surges on Q4 Earnings Beat

Micron Technology’s stronger-than-anticipated Q4 earnings results sparked a 14.7% jump in its stock price in September 2024, as the company reported stellar 93% year-over-year revenue growth, amounting to $7.8 billion. Strong demand for AI drove the surge in DRAM sales, while NAND revenue hit a milestone, surpassing $1 billion for the first time. Adjusted EPS of $1.18 marked a significant turnaround from the previous year’s loss of $1.07 per share.

The company’s balance sheet remains robust, with $9.16 billion in cash and investments, alongside a notable operating cash flow of $8.51 billion, up from $1.56 billion a year prior. Its low debt-to-equity ratio of 0.30x highlights Micron’s prudent financial management.

Additionally, as AI and machine learning adoption accelerate, Micron stands poised for long-term growth, supported by a strategic $125 billion investment plan. This includes the construction of manufacturing facilities in Idaho and New York, bolstered by a $6.1 billion CHIPS Act grant received in April. With these initiatives, Micron’s position as a key player in the semiconductor industry looks increasingly solid, fueled by a dynamic market and smart investments for the future.

What's in Store for MU Stock in Q1?

For the upcoming Q1 earnings, management projects revenue to increase by approximately 85% year-over-year to $8.7 billion in Q1 (plus or minus $200 million). Plus, non-GAAP gross margin is estimated to be between 38.5% and 40.5%, with non-GAAP EPS expected to be $1.74 (plus or minus $0.08) – a stark reversal from last year’s $0.95 loss.

Analysts tracking Micron Technology predict its Q1 EPS to surge 242.9% year over year to $1.60, with revenue estimated to be around $8.71 billion. While fiscal 2025 guidance remains under wraps, the Street anticipates Micron’s bottom line to shoot up to $8.31 per share, with a further 51.4% leap to $12.58 in fiscal 2026.

What Do Analysts Expect for Micron Technology Stock?

Stifel recently reaffirmed its "Buy" rating and $135 target on Micron stock, anticipating fiscal Q1 results to meet estimates with strong growth. While Q2 guidance may lean conservative amid seasonal and cyclical pressures, Stifel sees this as a "mid-cycle correction." The firm expects Micron to maintain solid margins and profitability, positioning it for resilience as consumer demand stabilizes.

Analysts are upbeat about MU stock’s prospects, with a consensus “Strong Buy” rating overall. Among the 29 analysts covering the stock, 25 are highly bullish with a “Strong Buy,” two advise a “Moderate Buy,” one suggests a “Hold,” and the remaining one recommends a “Strong Sell.”

The mean price target for MU is $149.37, hinting at upside potential of 36% from current levels. The Street-high target price of $250 implies the stock could rally as much as 128%.

Despite its cyclical nature, Micron's dominance in semiconductors and focus on innovation align it with future growth trends. With earnings due soon, the stock remains a compelling bet for long-term growth seekers.