Micron Gets a Rare Bear Call as BNP Paribas Warns on Oversupply

(Bloomberg) — Micron Technology Inc. shares tumbled on Thursday, with the maker of computer memory chips extending a recent selloff as BNP Paribas Exane warned that the stock would continue to underperform others connected to artificial intelligence.

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Karl Ackerman downgraded the stock by two notches, to underperform from outperform, becoming the only analyst tracked by Bloomberg to recommend selling the shares. He also cut his price target to a Street-low view of $67, down from $140. In contrast, more than 90% of analysts have the equivalent of buy ratings, and the average price target is $156, more than 80% above its current price.

“While some investors correctly anticipate downside risk to near-term results, we think Micron will underperform AI peers through ’25,” he wrote. He added that capacity oversupply of high-bandwidth memory (HBM) chips will lead to “a faster than anticipated market correction of conventional DRAM ASPs,” referring to average selling prices for DRAM memory chips.

Shares fell 6% to $85.21. The stock is on track for its lowest close since February, having dropped more than 40% off a June peak. Even with that slump, Ackerman wrote, the “risk-to-reward at current level remains unfavorable.” Micron is essentially flat on the year, compared with a 16% gain for the Philadelphia Stock Exchange Semiconductor Index. AI-focused chipmaker Nvidia Corp. is up nearly 140%.

Micron’s high-bandwidth memory chips are expected to see a demand tailwind from AI, although some have argued the move is overdone. The company’s most recent results, from late June, featured a forecast that disappointed investors looking for a bigger AI-related boost. It will report fourth-quarter results later this month.

One point in favor of bulls is that the stock’s selloff has made it attractively valued by some metrics. It trades at less than 9 times estimated earnings, one of the lowest such multiples in the Nasdaq 100 Index. Nvidia, in contrast, trades around 33 times forward earnings.

Raymond James is among the firms staying positive, writing that near-term weakness is already priced into the shares.

“Micron appears firmly on track to achieve its HBM targets, and we expect ongoing yield improvement to remain a tailwind to margins,” wrote analyst Srini Pajjuri.

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He affirmed an outperform rating on the stock but lowered his price target to $125 from $160, citing a recent multiple contraction in the sector. Despite that, he added, “a higher peak multiple is justified given the secular growth from HBM.”

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