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Micron Technology (MU) is positioned for significant potential upside following its recent pullback after its latest earnings report. Coupled with Micron’s strategic focus on high-bandwidth memory, or HBM, chips, it creates an ideal entry point with a favorable risk-to-reward profile to capitalize on the growth of GPU chips for artificial intelligence processors. Trade timing The timing to initiate bullish exposure on MU is favorable, given the stock’s recent pullback toward strong technical support near $110. With its recent outperformance relative to the broader market, MU offers an attractive opportunity to capture substantial upside toward our $135 price target. Fundamentals MU trades at a compelling valuation relative to industry peers, supported by exceptional growth prospects and strong profitability metrics, enhancing its attractiveness. Forward PE ratio: 9.2x vs. industry average 26.9x Expected earnings per share growth: 105.9% vs. industry average 18.1% Expected revenue growth: 26.8% vs. industry average 10.4% Net margins: 18.4% vs. industry average 10.4% Bullish thesis HBM focus: Micron has strategically shifted toward the expanding HBM chip market, critical for AI applications. MU is expected to capture a 20% to 25% market share by the end of 2025, positioning it against industry leaders SK Hynix and Samsung Electronics . Industry outlook: SK Hynix recently reiterated expectations that its HBM sales would double in 2025, indicating a robust demand environment that will likely benefit Micron. Competitive advantage: Samsung’s delays in meeting Nvidia’s HBM chip supply requirements create a market opportunity for Micron to expand its market share. Options trade To capitalize on Micron’s bullish outlook and current favorable risk-to-reward setup, I’m buying a September $110/$130 Call Vertical @ $6.54 debit. This entails: Buying the Sep. 19, $110 Call at $8.45 Selling the Sep. 19, $130 Call at $1.91 Maximum reward: $1,346 per contract if MU is above $130 at expiration Maximum risk: $654 per contract if MU is below $110 at expiration Breakeven point: $116.54 View this Trade with Updated Prices at OptionsPlay This bullish options strategy leverages Micron’s pullback and strategic industry positioning within the HBM market, providing you with an excellent opportunity to participate in upside with a defined risk strategy. DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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