Micron (NASDAQ: MU) stock surged 7% on March 12th, catalyzed by the February CPI report. The CPI report was better than expected, showing inflation cooling compared to the previous month and alleviating some market fear.
Assuming the CPI continues to moderate in the coming months, it will allow the FOMC to cut interest rates again and mitigate some of the risk associated with Trump’s tariffs. But that’s not why Micron’s stock surged.
Micron’s stock surged because macroeconomic headwinds and uncertainty caused it to trade near long-term lows, where it presented a deep value.
1. Micron Is a Deep Value for AI Investors
Micron’s stock price advance confirmed support at the bottom of a long-term trading range, where it traded at rock-bottom pricing. The stock still trades at only 14x this year’s earnings with a forecast for growth centered in AI. Micron’s position in the HBM3E semiconductor market is assured, with its technology providing better performance at lower power consumption rates.
Although analysts' estimates for FQ2 have fallen over the past few months, they remain strong. They forecast 36% topline growth and a widening margin, and the long-term outlook is equally robust.
The consensus forecast reported by MarketBeat expects mid-30% growth in 2026, and it may be low due to results from NVIDIA (NASDAQ: NVDA). NVIDIA beat on the top and bottom line and raised its guidance as demand for its data center/AI GPUs increases.
Micron’s HBM3E is critical to NVIDIA’s GPU production, including the Blackwell and upcoming Rubin product lines. The takeaway is that Micron’s P/E multiple falls to 8x EPS relative to 2026 and lower compared to 2027 expectations, suggesting the stock price could double over the next 12 to 18 months.
2. Analysts Sentiment Firms, Forecasts 40% Upside
Micron analysts have moderated their stock price targets since the Q1 release, but their data trends are otherwise bullish. The number of analysts with current coverage has been steady while sentiment firmed within the Moderate Buy range.
The Moderate Buy rating has a bullish bias because 89% of analysts rate the stock at a Buy or better rating with only two holds and one sell.
While down compared to late December 2024, the price target forecasts a 40% upside, and the revision trends show conviction firming around this range. Citigroup is the most recent to issue coverage, calling Micron one of the two top AI-related picks despite broad sector weakness in January.
AI demand remains strong, is 20% of total semiconductor demand, and will be compounded by normalization in other end-markets as the year progresses. Citi expects total annual semiconductor sales to rise by nearly 18%.
3. Institutional Buying Spikes in Q1 2025
Institutional trends for Micron are solid, pointing to higher stock prices over time. The trends include buying on balance for 2024 despite a Q4 selling spike and the ramping buying activity to a multiyear high in Q1 2025. The Q1 2025 activity netted 5.3% of the market cap, with shares trading near $95 and can be expected to remain bullish in 2025.
Not only is the business expected to stay solid in 2025 and 2026, but cash flow is also driving balance sheet improvement and dividend distribution. Dividends aren’t robust, with an annualized yield near 0.5%, but they are compounded by positive cash flow, low leverage, and a 3.75% year-over-year equity increase in Q1.
The Technical Outlook: Micron Stock Is Range Bound
Micron’s stock surged more than 7% following the CPI report, but the market remains range-bound with a top near $110. The price action will likely extend its rebound and approach the critical resistance target in Q2 but may not break out to new highs until later in the year. The catalysts include the upcoming Q2 earnings report and the potential for outperformance relative to the low bar set by analysts.
