Wells Fargo analyst Aaron Rakers highlighted Micron Technology’s strong position to benefit from the growing demand for memory in AI applications, emphasizing that the importance of memory in this sector is often underestimated. He maintains a positive outlook for Micron, citing a recovery in server spending and a projected increase in demand for memory products, while keeping a buy rating with a target price of $175.
In a recent discussion, Wells Fargo analyst Aaron Rakers shared insights on Micron Technology’s potential benefits from the growing demand for memory in artificial intelligence (AI) applications. Rakers emphasized that the role of memory in AI is often underestimated, suggesting that Micron’s position in this market is strong and sustainable. He noted that the shift towards AI-specific memory solutions is not only positive for Micron’s revenue but also enhances its profit margins, providing a more stable outlook in what has traditionally been a cyclical memory market.
Rakers highlighted the importance of high bandwidth memory in data centers, which is crucial for supporting AI workloads. He pointed out that there are signs of a recovery in traditional server spending, driven by the need for infrastructure upgrades to accommodate AI applications. This trend is not only reflected in Micron’s performance but also in the results of other companies in the tech sector, such as Broadcom. The analyst believes that this recovery will lead to increased demand for memory products.
Additionally, Rakers discussed the inventory situation in the PC and smartphone markets, indicating that there is a potential for inventory digestion as the industry moves into the first half of 2025. He mentioned that the growth of AI PCs and a refresh of Windows systems next year could further drive content growth in these markets, benefiting Micron and its peers.
When asked about Micron’s position relative to other major tech companies like NVIDIA and Dell, Rakers reaffirmed that Micron remains his top pick for 2023. He believes that the structural importance of memory in AI applications has not been fully recognized by the market. Rakers expressed confidence that concerns about the cyclical nature of the memory market are overstated, particularly as the industry looks ahead to 2025.
In conclusion, Rakers’ analysis presents a positive outlook for Micron, driven by the increasing significance of memory in AI and the anticipated recovery in server spending. He maintains a buy rating on Micron with a target price of $175, underscoring his belief in the company’s strong position within the evolving tech landscape.