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Wall Street is crazy about everything related to artificial intelligence, so it's time to add another name to the list: computer memory and storage products experts. micron (NASDAQ:Mu). Despite not being able to perform well, Nvidia (NASDAQ:NVDA) or super microcomputer (NASDAQ:SMCI), MU stock has become a hot commodity, rising more than 55% since the beginning of the year. It could get even hotter.
Bank of America Securities analyst Vivek Arya recently rated MU stock a “buy” and set a price target of $144. Analysts believe the surge in demand for AI could lead to a surge in security prices. Thanks to Micron's high-bandwidth memory (HBM) Chip technology could help meet increasingly demanding demands for smart technology.
Additionally, Arya believes Micron is in an excellent position to grow its market share in the HBM space from less than 5% to the mid-20s. According to Mordor Intelligence, the HBM sector's valuation could reach $2.52 billion this year. By 2029, its size could reach $7.95 billion, corresponding to a compound annual growth rate (CAGR) of 25.86%.
Micron could benefit from an 'integer' approach
Moving on to the technical area, MU stock closed Wednesday's trading at $128.01. Shares rose more than 1% in after-hours trading to $129.49. Based on the “integer” concept, bulls could aim to push the stock to $130.
Interestingly, the market tends to approximate tradable assets. More significant levels, such as $130, can see significant activity. This may stem from the psychological satisfaction we humans feel from “pretty” numbers.
Now, we are not here to add psychological research, but rather to use this knowledge to our advantage. In fact, many other trading systems have taken note of this phenomenon and are using it to develop profitable tactics. Therefore, the market will almost certainly drive her MU stock to the next big “clean” number, $130.
Even more compelling is the possibility that optimists will try to push MU stock to $140. Looking at Barchart's Trader's Cheat Sheet, we see a large resistance barrier between $130.42 and $137.93. It's certainly not easy to get to $140. However, a drop below the last resistance level at $137.93 could spell trouble for the bulls.
Trade of the Day: Buy MU Stock Call Option
There are two clear opportunities with MU stock. One is a short-term bet that Micron will hit $130. My idea is to consider the April 12, 2024 $130 call that closed on Wednesday at a $2.90 premium. Here, the bid-ask spread, represented by the median price, is relatively narrow at 2.09%. This is probably due to the large influx.
Another long-term speculation idea is to consider the July 19, 2024 $140 call. Here, the premium is $9 because the expiration period is quite long. However, the spread is only 1.08%, which is attractive. Given how quickly AI companies have soared over the past year or so, it shouldn't take long for MU stock to reach this milestone price.
Admittedly, it's a riskier proposition. But with so much enthusiasm for digital intelligence, MU stock should be on your radar.
On the date of publication, Josh Enomoto did not have (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer and are influenced by InvestorPlace.com. Publishing guidelines.