JPMorgan likes this chipmaker ahead of earnings next week

JPMorgan anticipates Micron Technology will exceed consensus expectations for revenue, gross margin, and EPS when it reports earnings next week, driven by strong HBM demand and consumer applications. The firm reiterated its overweight rating and a $135 price target, implying an 11% upside. While JPMorgan sees near-term strength, it remains cautious about potential tariff-related weakness and demand pull-forward in the second half of the year.

Analysis

JPMorgan projects Micron Technology (MU) will surpass consensus estimates for revenue, gross margin, and earnings per share in its forthcoming earnings report, attributing this to sustained momentum in high-bandwidth memory (HBM) demand and positive trends in consumer applications. The firm reiterated its overweight rating on Micron, along with a $135 twelve-month price target, suggesting a potential upside of nearly 11% from Micron's $121.82 closing price on Wednesday. This outlook is set against a backdrop of Micron's stock significantly outperforming the broader market this year, having risen by more than 44% year-to-date. While JPMorgan views the near-term fundamental landscape as favorable, it also advises caution regarding the second half of the year due to potential tariff-related weaknesses or demand pull-forward, which could moderately temper, but not halt, quarter-over-quarter improvements in average selling prices (ASP) and bit shipments.

Key Decisions for Investors

• Investors should monitor Micron's upcoming earnings for validation of strong HBM demand and any updates to its full-year guidance, especially concerning average selling prices.
• Consider the potential impact of tariff-related headwinds and demand pull-forward in the second half of the year, as highlighted by JPMorgan, which could affect sustained growth.
• Evaluate the current valuation and risk-reward profile, considering the stock's substantial year-to-date appreciation of over 44% against the identified second-half uncertainties.