Micron becomes latest chipmaker to hit $1 trillion valuation
What's the story
Micron Technology Inc. has become the latest chipmaker to hit a market capitalization of over $1 trillion. The milestone was achieved after a massive 19% surge in its shares on Tuesday. The jump in value is mainly due to the rising demand for artificial intelligence (AI) technology, which requires advanced memory chips like those produced by Micron.
Analyst prediction
UBS raises price target for Micron
UBS Group AG has raised its price target for Micron from $535 to a street-high of $1,625 per share. The new target suggests that shares could almost double from current prices. The firm expects the market will start applying a more 'normal' multiple on the stock as details emerge about structural changes AI has driven in the entire memory complex.
Market dominance
Stock has tripled this year
Micron's stock has more than tripled this year, adding to a nearly 240% surge last year. Other chipmakers like SK Hynix and Samsung are also benefiting from the AI boom as they can raise prices amid global memory shortages caused by high demand for AI technology. SK Hynix has also hit a market capitalization of over $1 trillion. The company's shares surged as much as 14.9% on Wednesday, taking its market value to an all-time high of $1.12 trillion.
Market shift
AI's impact on memory chips business
The traditional cyclical nature of the memory chips business has been disrupted by the massive AI infrastructure build-out cycle. The huge amount of data processed by AI tools in development has created a steady demand for memory chips, even as supplies have dwindled. UBS analyst Timothy Arcuri noted that hyperscalers seem more willing to exchange pricing for multi-year supply visibility and predictability around future deployment economics.