After soaring 100%, Micron's "good days" will continue

According to Zhitong Finance, Micron Technology (MU.US) has been one of the beneficiaries of the artificial intelligence boom, with its stock rising nearly 100% in the past 12 months as spending increases and the memory market rebounds. Mizuho Securities believes that Micron's good days may continue as the company may gain market share in the high-bandwidth memory (HBM) field. After meeting with Micron's CFO Mark Murphy and CTO Scott DeBoer, Mizuho believes that Micron is enhancing its HBM3E (High Bandwidth Memory 3E) product, which consumes 30% less power than its competitors. The investment firm stated that this could drive Micron's stock price up amid increasing concerns about power consumption in artificial intelligence. Seeking Alpha contributor and analyst Robert Castellano recently upgraded Micron's rating to "Buy" as the company is capable of marketing its HBM3E packaging to NVIDIA (NVDA.US). HBM3E is the fifth-generation high-bandwidth memory, and Mizuho sees it as a "two-horse race" between Micron and SK Hynix of South Korea. Mizuho stated that with NVIDIA's growing demand, HBM supply is tight, which is a positive sign for Micron. The analyst wrote: "We believe the potential yield issue is at a key supplier, where the stacking height of its 1-alpha HBM3e is tied to latency, which will allow MU and Hynix to gain share of HBM3e on the B100/B200/GB200 platforms, driving the path from the current increase of about 5% to around 25% by 2025." The analyst reiterated a Buy rating on Micron and raised the target price from $130 to $150 due to an upward revision in memory price estimates. Mizuho stated that Micron, which began mass-producing HBM3E chips in February this year, may have already sold out most of its high-bandwidth memory for 2024 and "most of 2025." With the industry still "tight," supply may be at its lowest level, pushing prices higher. The next version of high-bandwidth memory, HBM4, may ultimately require TSMC's cocos-l, as the stack height standard for processors has been relaxed. Analysts say that Micron is using a technology called thermocompression non-conductive film, which Micron believes, compared to SK Hynix's products, helps improve packaging density, thickness consistency, faster specifications, smaller bumps, and better stack height spacing. Mizuho's analysts wrote: "We believe Micron may see hybrid/3D bonding enter the commercial evaluation stage after HBM4, possibly after 2027/28." Mizuho analysts stated that this could help the HBM market grow at a compound annual growth rate of around 65%, reaching $17-18 billion by 2026