Micron stock surges 207% in 2024 amid AI demand

Micron Technology’s stock has surged 207% this year, lifting its market value and leaving investors wondering how long the rally can last. The chipmaker closed Friday with shares trading near record highs, a gain driven by soaring demand for the memory chips it supplies to artificial intelligence and data center markets. But with growth expectations racing ahead of fundamentals, analysts warn the stock may be due for a sharp pullback.

The boom is fueled by AI, which is gobbling up high-bandwidth memory (HBM) and conventional DRAM at unprecedented rates. Micron has become a key supplier of HBM4 to top AI chip designers, and tight supply across its product lines has driven revenue to $41.5 billion in the latest quarter, up sharply from a year ago. Management now expects fourth-quarter revenue of $49 billion to $51 billion and adjusted earnings per share of $30 to $32, lifting the stock’s forward price-to-earnings ratio to just 5.5 times—historically low for a company in Micron’s cyclical sector.

Yet cracks are showing. DRAM and NAND prices are still rising, but the pace is slowing fast. TrendForce projects third-quarter contract price increases of just 13% to 18% for DRAM and 10% to 15% for NAND, down from the 60%+ and 80%+ jumps seen in the prior quarter. Some NAND segments have already stalled, with wafer prices flat in July as buyers pull back. Analysts say early restocking by PC makers and cloud providers could pull demand forward, leaving thinner sales later this year.

Investors are left balancing Micron’s strong near-term numbers against the long shadow of memory-chip cycles. When supply catches up, prices and margins tend to fall hard. With growth expectations stretched thin, the stock’s low valuation may not last. A pullback isn’t certain, but history suggests that when a memory-chip rally runs this hot, it rarely ends gently.