With the surge in interest on Wall Street for anything related to artificial intelligence, the spotlight now shines on Micron (NASDAQ: MU), a specialist in computer memory and storage products. While not reaching the heights of Nvidia (NASDAQ: NVDA) or Super Micro Computer (NASDAQ: SMCI) in terms of performance, MU stock has experienced significant growth, up over 55% year to date, making it a sought-after asset with the potential for further appreciation.
Recently, Bank of America Securities analyst Vivek Arya issued a bullish outlook on MU stock, assigning it a “buy” rating and setting a price target of $144. Arya is optimistic about the potential for Micron to capitalize on the rising demand for AI technologies. Leveraging its high-bandwidth memory (HBM) chip technology, Micron is well-positioned to meet the increasing requirements of smart technologies.
Arya also anticipates that Micron could expand its market share in the HBM sector substantially, potentially growing from less than 5% to around 20%. Market research from Mordor Intelligence suggests that the HBM market could reach \(2.52 billion in value this year and soar to \)7.95 billion by 2029, reflecting a robust compound annual growth rate (CAGR) of 25.86%.
Micron’s Potential Upside with Strategic Approaches
In the realm of technical analysis, MU stock concluded the Wednesday session at \(128.01, with afterhours trading pushing the price up to \)129.49, indicating a possible move towards \(130. Drawing on the concept of round numbers, such as \)130, it is conceivable that bullish momentum could drive the stock price towards this significant level.
Investors often gravitate towards whole numbers, like $130, as key levels that could trigger substantial trading activity. This behavior may stem from the psychological appeal of neat, round figures.
While acknowledging the psychological aspect, our focus is on leveraging this insight strategically. Many trading systems recognize this phenomenon and incorporate it into their strategies. Therefore, it is highly probable that MU stock will gravitate towards the next major round number, $130.
Chart by Josh Enomoto, InvestorPlace.com
Furthermore, there is potential for optimistic investors to target \(140 as the next milestone for MU stock. Analysis from Barchart’s Trader’s Cheat Sheet indicates notable resistance levels ranging from \)130.42 to \(137.93. Breaking through the final hurdle at \)137.93 could pave the way for a bullish trend towards $140.
Trading Strategy: Options Play on MU Stock
For traders eyeing opportunities with MU stock, two distinct possibilities emerge. In the short term, a speculative bet on Micron hitting \(130 could involve considering the 12 April 2024 \)130 call option, priced at $2.90 as of Wednesday’s close. The narrow bid-ask spread of 2.09% indicates robust trading volume.
Alternatively, for a longer-term outlook, traders may explore the 19 July 2024 \(140 call option, priced at \)9 due to the extended time frame until expiration. Despite the higher premium, the appealing spread of 1.08% presents an enticing opportunity. Given the rapid ascent of AI-related companies in recent times, reaching $140 could be within reach for MU stock.
While acknowledging the elevated risk associated with these trades, the fervor surrounding digital intelligence positions MU stock as a compelling candidate for investors to monitor closely.
Disclaimer: The author, Josh Enomoto, has no direct or indirect positions in the securities discussed. The views expressed are solely those of the author, adhering to the InvestorPlace.com Publishing Guidelines.
Josh Enomoto, a former senior business analyst at Sony Electronics, has played a pivotal role in securing major contracts with Fortune Global 500 firms. With a track record of delivering unique insights across investment markets and diverse industries, including legal, construction management, and healthcare, he continues to provide valuable perspectives for investors. Connect with him on Twitter at @EnomotoMedia.
