Why Micron stock is surging another 6% on Thursday

Micron Technology MU stock extended its rebound to a third straight session on Thursday, rising 6% to $966.01 after rising around 5% on Wednesday.

The stock remains up more than 200% this year, although it is still down 20% from its late-June peak.

Concerns over the sustainability of chip pricing contributed to the recent pullback, which saw Micron shares fall 28% in July.

The latest rebound has been supported by renewed expectations for strong artificial intelligence spending and demand for memory chips.

Strong results from Super Micro Computer, Nebius and CoreWeave have helped reinforce those expectations.

Analysts remain bullish on Micron, with the average price target implying more than 65% upside from current levels.

Tight memory supply through 2027 is a key factor behind those targets.

YMTC emerges as potential competitive threat

While AI-related demand for memory remains strong, new research points to a growing competitive threat in the NAND market.

Micron fell behind several rivals in the second quarter in terms of NAND memory shipments, according to a report Wednesday from Counterpoint Research.

NAND memory is used across products ranging from smartphones to AI infrastructure and accounts for a substanital amount of Micron's revenue.

"AI has become the defining variable for NAND demand. As the AI paradigm shifts from training to inference, demand has surged," Counterpoint Research said.

Samsung maintained its lead with a 25% shipment share, followed by SK Hynix at 22%.

Yangtze Memory Technologies Co., or YMTC, ranked third with a 14% share, narrowly ahead of Kioxia, while Micron trailed.

The development puts YMTC on investors' watchlists as a potential new Chinese competitor to Micron.

YMTC has been on the US Commerce Department's Entity List since 2022 and is preparing to go public in mainland China, although it has not disclosed a date for its initial public offering.

Micron retains revenue advantage

Micron still held an advantage over YMTC in revenue, highlighting differences in the companies' product mixes.

"Shipment volume, however, does not translate directly into revenue. YMTC ranked third in shipments this quarter but closed fifth in terms of revenue, behind Micron and Kioxia, because its product mix is still concentrated in consumer applications with a low share of high-priced data-center eSSDs," Counterpoint researchers said.

The researchers said YMTC plans to shift its product mix further toward enterprise solid-state drives, or eSSDs, during the second half of the year.

"The Chinese vendor plans to shift its mix further towards eSSDs in the second half of the year to cement its third-place position globally, supported by growing avenues for capital support," the researchers said.

September earnings in focus

For Micron investors, the next major catalyst is the company's fiscal fourth-quarter earnings report, scheduled for September 29.

Wall Street expects earnings per share of $31.15, sharply above the $3.03 reported a year earlier.

Revenue is expected to reach $50.43 billion, representing more than 300% year-over-year growth.

Micron management has also pointed to strong demand for its high-bandwidth memory, or HBM, chips. CEO Sanjay Mehrotra has said HBM orders are largely booked through 2027.

The outlook leaves Micron with strong exposure to continued AI spending, but the stock's more than 200% gain this year also leaves investors watching execution and memory pricing closely.

Memory prices can change quickly if supply increases or demand weakens.