Micron Technology (MU 1.72%) recently reported another quarter of strong demand for its memory products. Baird analyst Tristan Gerra updated his guidance as a result, maintaining an outperform (buy) rating on the shares and changing the firm's price target from $130 to $163. The new price target implies a 77% upside over the current $92.13 share price.
Will Micron stock soar in 2025?
There are good reasons to be bullish on Micron. Revenue hit $8.05 billion in the most recent quarter, up 38% year over year, driven by strong demand for high-bandwidth memory in the data center market. Micron has also benefited from higher selling prices for its Dynamic Random Access Memory (DRAM) and NAND flash memory over the last year.
Micron is well-positioned to ride the growing demand for advanced memory technology to handle artificial intelligence (AI) workloads. Management expects the business to report record revenue in the fiscal third quarter.
These products have a history of sharp swings in selling prices, which makes Micron's business very cyclical, so timing is something to consider when buying Micron stock. On that note, Micron's NAND products experienced a sequential decline in selling prices last quarter, sending revenue down 17% quarter over quarter. This creates more uncertainty for the business, which explains why the stock is trading roughly 40% below last year's highs.
Still, AI data center demand is not slowing down. Micron expects improvements in the supply situation for NAND products, which should benefit revenue. Looking out to 2026, management is expanding its high-bandwidth memory capacity to meet higher demand from data centers.
The stock is trading at 13 times this year's earnings estimate, which is below its historical average price-to-earnings ratio of 19.9. Assuming Micron reports record revenue this year, consistent with Wall Street's expectation, there's enough value in the shares to justify the stock reaching the $163 price target within the next year.
