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In a note to clients upgrading their outlook of the stock to buy from hold, the analysts said that an “inflection is here” in the prices for the DRAM semiconductors, which hold on to information from applications while a system is in use.
The analysts added that DRAM prices are beginning to “improve at least one quarter” ahead of their expectations thanks to a recent surge in demand for artificial intelligence servers. So-called high bandwidth memory (HBM) DRAM chips are commonly used in generative AI.
“Our recent checks with the supply chain suggest that the price increases are sustainable and should accelerate in the next two quarters given the limited supply growth,” the analysts said.
As a result, they now expect Wall Street estimates for Idaho-based Micron to move up “meaningfully” for both the 2023 and 2024 calendar years. Micron, which is due to unveil fiscal fourth quarter results later this month, is also seen delivering a better-than-expected forecast for revenue and earnings per share in its first quarter, the Deutsche Bank analysts predicted.
The company beat projections in its most recent three-month results released in June, as an industry-wide glut of memory chips showed signs of easing.
“While our previous neutral stance on [Micron] was driven by the levels of excess inventory in the supply chain and weak macro end-demand, we now see the worst of the downcycle as behind us,” the analysts said.
