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Micron outlook stays mixed as AI demand offsets valuation and competition
Micron cited record fiscal Q3 operating cash flow, which rose more than fourfold year over year to $41.46 billion, even as Alphabet’s AI advances pose a long term risk.
Micron’s stock outlook remains mixed as investors weigh several competing catalysts, according to Yahoo Finance. The memory chip maker is expected to benefit near to medium term from the AI boom, and Bank of America recently argued that low cost, open source AI models made in China could support Micron’s demand. Bank of America said Chinese open AI models can be up to 5-350x cheaper than Western counterparts, and it argued that these models still require the same or more memory as model weights and active parameters increase. The bank also noted that downloading open models can raise memory demand, while saying Micron could resume share buybacks toward the end of this year. BofA kept a $1,550 price target and a Buy rating. Micron’s recent financial performance also highlights the AI driven tailwind, the outlet said. In its fiscal third quarter, operating cash flow more than quadrupled year over year to $41.46 billion, and operating cash flow rose 5.5 times to $25.39 billion. In a June 24 press release, Micron’s CEO Sanjay Mehrotra linked the results and Q4 outlook to the strategic value of memory in the AI era. Despite that momentum, Yahoo Finance pointed to risks that could temper the stock. It cited Alphabet’s longer term technological progress, including the company’s TurboQuant compression method, and said investors have been unenthusiastic about Micron in recent weeks. The article also referenced Micron’s low valuation, including a forward price to earnings of 13.58 times.