This Semiconductor Stock is Beating Broadcom and Nvidia So Far This Year And It Could Gain Another 34%

What’s been the best-performing semiconductor stock of the year?

Broadcom (NASDAQ:AVGO | AVGO Price Prediction) would have been a safe answer, especially after its latest blowout quarterly earnings result. Nvidia (NASDAQ:NVDA) would have been another, given its meteoric two-year rise and how well-positioned the GPU giant is to shock and awe with its Rubin chips and beyond. And while Broadcom and Nvidia have both been exceptional gainers on the year, it’s a “commoditized” memory chip maker that’s led the way for the semis, at least on a year-to-date basis.

Enter shares of Micron (NASDAQ:MU), which soared 7.5% on Thursday’s upbeat session, putting shares up more than 72% so far on the year, topping Broadcom and Nvidia, which are up 55% and 28%, respectively, year to date.

A big price target hike for MU stock ahead of earnings. Does a breakout moment loom?

With a fresh upgrade courtesy of Citi, which hiked its price target by $25 to $175 per share, and quarterly earnings just under two weeks away, perhaps the breakout “value” name in semis is worth a closer look as we pass September’s midpoint. For the most part, it’s been a strong and stable month of September so far, which may come off as a bit of a surprise given the month’s jittery track record of market losses.

In any case, I still don’t think it’s too late to punch a ticket to Micron stock as its shares look technically sound going into earnings. Indeed, buying MU shares for a breakout play might just work this time of year. Of course, chasing a name that’s up 17% in a week may not sit too well for some of the more cautious investors out there.

Though time will tell if MU stock can have its own big breakout moment as analysts eye new all-time highs, I would stay tuned into earnings that are up ahead, as they really could be make or break for a lesser-loved semiconductor firm that could have ample ground to catch up over its rivals. Dismiss Micron as a less-timely, cheap play on chips, if you will, but real AI tailwinds might just prove the skeptics wrong.

What’s behind the big Citi upgrade?

Indeed, it’s quite rare to witness such an explosive single-day upside move on the back of Wall Street upgrades. However, Micron stock was entering September with a relatively modest valuation, especially given the potential for accelerating momentum in its high-performance memory (HPM) business, which I highlighted in a prior piece.

Despite Thursday’s melt-up, shares of MU still look underpriced, even absurdly undervalued at 10.6 times forward price-to-earnings (P/E). Given this, I certainly wouldn’t be afraid to add to a position ahead of its big number, especially when you consider the positive surprises for AI stocks we’ve seen in recent weeks. Of course, expectations are going to be that much higher after Citi’s big upgrade, and that could limit the rally potential we’ll see if Micron does top estimates by a considerable margin.

In any case, Citi isn’t just upbeat over Micron’s “AI exposure,” it’s also a fan of the potential for a “DRAM market upturn.” Indeed, the stage may very well be set for strength across the board. In any case, we’ll have to wait and see. Citi’s new price target entails a 16.7% gain from Thursday’s close. In any case, it’s Baird that holds the Street-high price target on MU stock, which currently sits at $200 per share, suggesting 34% worth of upside from today’s levels.

Baird is also optimistic about HBM and DRAM (dynamic random-access memory) and what the year ahead could hold for the relatively underappreciated gainer in the semi scene.

With such a low multiple and the confidence of so many Wall Street veterans, I wouldn’t shy away from buying ahead of the number, especially given the fireworks we’ve seen from big tech this earnings season.