Micron Technology (NASDAQ:MU) Faces AI Boom, Insider Selling, and Cyclical Risks – What’s Next?
With DRAM Prices Rising and a 21% Upside to $128, Is Micron Technology (NASDAQ:MU) a Buy or a Risky Hold? | That's TradingNEWS
Is Micron Technology (NASDAQ:MU) Overheating or Just Getting Started?
Micron Technology (NASDAQ:MU) has been one of the biggest beneficiaries of the AI revolution, with its Q1 FY25 revenue jumping 84% YoY to $8.71 billion. The demand for DRAM, particularly high-bandwidth memory (HBM) for data centers, has pushed sales higher, with DRAM now accounting for 73% of total revenue. However, Micron’s latest guidance raised concerns, as the company expects Q2 revenue to drop to $7.7 billion–$8.1 billion, citing rising DRAM and NAND inventories. This mixed outlook raises a critical question: Is MU’s stock price already pricing in peak growth, or is there still room to run?
AI-Driven Growth – How Micron Technology (NASDAQ:MU) is Capitalizing on Demand?
Micron’s memory chips are at the center of the AI explosion. The surge in AI workloads has driven an insatiable need for HBM3 and HBM3E chips, critical components for data centers powering Nvidia’s RTX 50 series and AMD’s AI accelerators. This has allowed Micron’s Compute and Networking Business Unit (CNBU) to dominate, contributing 50% of total revenue with an impressive 39% operating margin. However, not all segments are thriving—while data center demand soared, mobile and PC segments showed weakness, with mobile revenue dropping 19% sequentially. With AI driving long-term expansion, can Micron sustain its revenue momentum amid these mixed signals?
Insider Selling at Micron Technology (NASDAQ:MU) – Should Investors Be Worried?
A major red flag emerged when Micron insiders, including CEO Sanjay Mehrotra, sold over $4.66 million worth of stock in recent months, with no insider purchases recorded. The stock has surged past $100 per share, and while selling doesn’t always indicate trouble, the sheer volume of transactions raises concerns. Historically, insider selling at MU has often coincided with cyclical peaks, hinting at potential short-term downside. Investors tracking Micron’s insider transactions should consider whether management is signaling that the rally is reaching exhaustion.
Micron Technology (NASDAQ:MU) Faces NAND Market Challenges – Will It Impact Growth?
While DRAM demand is booming, NAND sales have struggled, with NAND revenue dropping 5% last quarter due to pricing pressure and weak demand in the automotive and PC markets. Micron’s 1-gamma node DRAM transition could help offset some of this weakness, as it increases memory density and improves cost efficiency. However, NAND remains a crucial part of the company’s growth strategy, and its struggles highlight the inherent cyclicality of the semiconductor market. If NAND pricing fails to recover, could it weigh down Micron’s overall profitability?
Micron Stock Valuation – Is It Still Undervalued at $95?
Micron’s valuation remains a critical point of discussion. With Wall Street setting an average price target of $130, the stock still has a 21% upside from its current price of $95. Analysts expect Micron’s EPS to hit $6.89 in FY25, a massive 430% YoY increase, with estimates rising to $11.21 by 2026. The stock currently trades at a forward P/E of 14x, which, while higher than historical levels, remains reasonable given its AI-driven growth prospects. However, past cycles suggest Micron’s stock tends to correct by 50% off peaks, and the current 37% decline from all-time highs suggests more downside risk may remain. Should investors buy now, or is patience key?
Buy, Hold, or Sell – What’s the Best Move for Micron Technology (NASDAQ:MU)?
With Micron’s DRAM business thriving and the company’s AI exposure driving long-term growth, the stock remains an attractive pick for investors betting on the future of data centers. However, short-term headwinds, including insider selling, NAND weakness, and cyclical risks, create a complex setup. If the stock pulls back below $85, it could present a better risk-reward opportunity. But if AI-driven demand continues to outpace expectations, MU’s path to $128 may still be intact. Should investors hold out for a better entry or buy into the AI-driven rally now?
