Micron Technology was gaining early Monday as the stock looks to break out of a three-day losing streak that has brought its value below $1 trillion. The debate is raging about how high memory-chip prices can go.
Micron shares were up 4.2% at $884.30 in premarket trading. If the move holds it could mark a halt to a slide that has taken down the stock 30% in the past month. The memory-chip maker closed below the $1 trillion market cap threshold on Thursday for the first time since June 5, according to Dow Jones Market Data.
Micron shares have gained more than 600% in the past 12 months as the growth of artificial-intelligence technology has intensified demand for memory components. However, an executive of key South Korean rival SK Hynix has warned that current prices are unsustainable in the longer term.
Chey Tae-won, chairman of SK Group, which controls SK Hynix, said memory prices were "abnormal" in a press briefing last week, according to local media.
"Prices have to normalize...Otherwise, the market shrinks and competitors flood in," he said, according to The Korea Herald,
However, that doesn't mean much will change in the short term. Chey also said he expected overall memory demand to rise nearly 60% next year and that demand would continue to outstrip supply through 2027. That's the view of Wall Street as well.
"We do not expect [memory] industry conditions to loosen until at least 2028, as clean room expansions do not begin contributing capacity until likely 2H27, and will still likely under-pace demand growth," wrote KeyBanc analyst John Vinh in a research note.
Vinh has an Overweight rating and $1,750 target price on Micron stock.
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