Shares of Micron Technology (MU) are down 4% after an analyst report raised questions about the long-term benefits the computer memory and data storage company is likely to receive from the artificial intelligence (AI) boom.
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Edgewater Research has issued a note questioning the AI benefits that will accrue to Micron Technology, which specializes in dynamic random access memory (DRAM). While many analysts have said that AI should increase demand for computer memory and data storage, some are now wondering aloud about the long-term benefits of AI and criticizing the heavy spending on AI technologies.
The note from Edgewater Research appears to be enough to pressure MU stock. However, Micron is not the only company to be singled out by Edgewater. On Nov. 11, the share price of Monolithic Power Systems (MPWR) fell 15% after the research firm suggested that the company could lose part of the business it currently has with microchip powerhouse Nvidia (NVDA).
Questioning the AI Thesis
Micron’s stock has been volatile lately as analysts and investors re-evaluate the AI thesis that has influenced markets for much of this year. While MU stock is up 22% on the year, it has now declined 10% in the last five trading sessions as the benefits of the AI boom are weighed against ongoing costs and cyclical weakness in the semiconductor space.
However, memory chips continue to be viewed as important AI accelerators among many analysts. High-bandwidth memory (HBM) chips, in particular, are viewed as a necessary complement to Nvidia’s powerful processors. Micron stock has also been pressured in recent months by concerns over increased pricing on the part of the company and an oversupply of HBM chips within the sector.
Is MU Stock a Buy?
Micron stock has a consensus Strong Buy rating among 25 Wall Street analysts. That rating is based on 23 Buy, one Hold, and one Sell recommendations made in the last three months. The average MU price target of $149.81 implies 49.05% upside potential from current levels.
