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A Japanese plant operated by a subsidiary of Micron Technology
Kiyoshi Ota/Bloomberg
Owning Micron stock is the best way to survive a pullback in semiconductors after the sector’s big artificial-intelligence-driven rally this year, says Citi Research.
Micron Technology
(ticker: MU) is a leader in the semiconductor markets for dynamic random-access memory, which is used in desktop computers and servers, and for flash memory, which is found in smartphones and solid-state hard drives.
On Monday, analyst Christopher Danely reiterated his Buy rating for Micron stock with a $75 price target.
“Semis are due for a pullback,” he wrote. “We reiterate our cautious stance on the group given the melt-up driven by AI hype. We are also changing our rankings and moving Micron to top pick.”
In early trading Monday, Micron stock is down 1.7% to $67.99. The stock is up 36% this year, compared with the 37% gain for the
iShares Semiconductor
exchange-traded fund (SOXX), which tracks the performance of the ICE Semiconductor Index, during the same time frame.
Danely says spending for AI semiconductors could cannibalize spending for other types of chips—including for PC processors—as the global economic environment continues remain difficult.
Micron has also gotten entangled in the rising geopolitical tensions between the U.S. and China. Last month, Cyberspace Administration of China (CAC) announced a ban on some products from Micron after a two-month probe, alleging potential network security issues that could compromise China’s national security.
The analyst predicts the U.S. government may now be more inclined to offer CHIPS Act money to Micron after China’s action. In 2022, President Joe Biden signed the CHIPS and Science Act, which included roughly $50 billion in funding to boost U.S. chip manufacturing.
“We believe the China ban on Micron should put the company in a position to get more money from the CHIPS Act,” he wrote.
Write to Tae Kim at [email protected]
Source: https://www.barrons.com/articles/micron-chip-ai-stock-pick-806ef36a?siteid=yhoof2&yptr=yahoo