This article first appeared on GuruFocus.
Micron Technology (NASDAQ:MU) is under more pressure as Citi lowered its price target on the company since memory prices just dropped. This shows that there are more worries about demand and pricing patterns in the foreseeable future.
The company lowered its goal from $510 to $425 after seeing that the costs of standard DDR5 DRAM have dropped by around 6% since Micron’s earnings release earlier this month. The downturn is due to lower spot prices in the memory market, which has made investors less confident.
New AI efficiency solutions, like Alphabet’s TurboQuant, are making things much harder. Citi said that these kinds of tools can cut down on the amount of memory and computing power needed for each activity, which might diminish the need for memory chips in the short term.
But the long-term picture could be more balanced. Analysts said that reduced prices frequently lead to more use over time, which means that making things more efficient might actually increase total demand instead than decrease it.
Since the end of March, Micron’s stock has dropped around 19%. This drop has also affected other businesses in the same industry, such Western Digital and Seagate.The most important question for investors is whether sluggish short-term prices will give way to higher, AI-driven demand in the next several quarters.
