New Price Target for Micron After Monster 600% Run
How much higher will Micron shares fly? Let’s go to the charts.
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Micron Technology (MU) shares jumped 19.3% on Tuesday as the semiconductor and data storage provider reported continued high demand for its products. Micron has already rallied 184% so far this year, and has gained a shocking 829% over the past 12 months.
Micron also joined an exclusive club, as the company’s market capitalization exceeded $1 trillion for the first time. Micron is now one of 10 companies in the S&P 500 that can boast of a trillion-dollar market cap. Of the 10, the only non-technology name is holding company Berkshire Hathaway (BRK.A)(BRK.B).
Orders for Micron’s high-bandwidth memory, which enables multiple terabyte per second throughput, far outstrip the available supply. That supply is expected to remain tight into next year, and possibly into 2028.
Micron’s 604% Gain
Less than two years ago, we recommended Micron at $127. At the time, Wall Street analysts were unhappy with the company’s projections for future earnings. We believed that Micron was merely managing expectations, thereby making it easier to beat future estimates.
Those who bought Micron at $127 are now up 604%. Could further gains lie ahead for Micron? Let’s go to the charts to find out.
Strong Market, Strong Sector, Strong Stock
The overall market is strong, as the S&P 500 closed above 7500 for the first time to reach yet another all-time high. The large-cap index continues to rally despite uncertainty over Iran, fears of inflation, and unimpressive job creation statistics.
Meanwhile, the tech-heavy Nasdaq 100 also reached an all-time high, closing above 30,000 for the first time.
The Philadelphia Semiconductor Index, of which Micron is a component, also closed at an all-time high.
Micron’s New Price Target
Micron has formed an A-B-C-D pattern. Based on this formation and the stock’s momentum, Micron’s new price target price is $1,150. A rally from Tuesday’s closing price of $895.88 to $1,150 would represent an additional gain of 28%.
One interesting aspect of Micron’s chart is its RSI (relative strength index) reading. Micron’s RSI is overbought (circled), which should surprise no one. What is surprising is that the overbought reading isn’t extreme, measuring just below 75 on a scale of 0 to 100.
Bottom Line
I’m tempted to lock in gains on Micron, perhaps by closing one-third of the position, and I might do so soon. However, it’s one of the strongest stocks, within a strong sector, within a strong market, making it an ideal momentum play.
We’re going to continue to hold our full Micron position for now.
At the time of publication, Ponsi was long MU.
