Micron Technology, a leading memory-chip company, witnessed a drop in its stock early Thursday following the release of its fourth-quarter earnings report. Despite this, UBS suggests that investors should not be deterred from betting on Micron's stock.

In premarket trading, Micron (ticker: MU) shares were down 4.9% at $64.85. However, the stock had experienced a remarkable 36% increase this year leading up to the close on Wednesday. Analysts have expressed positivity regarding the demand and supply balance for memory chips.

According to UBS analyst Timothy Arcuri, Micron's guidance may have been slightly below market expectations following a series of optimistic comments from management during conferences. The surprise came when Micron refrained from committing to gross margins in the second quarter of the current fiscal year, pushing that milestone to the second half of the year.

Despite this setback, Arcuri believes that an upturn is underway and projects that 2025 will be a record-breaking year for memory-industry revenue. As a result, he maintains a Buy rating and sets a target price of $76 for Micron's stock.

Arcuri states, "We think the path of least resistance is clearly to the upside here as demand, pricing, and profitability are all turning."

Micron has been grappling with lower demand for DRAM (dynamic random-access memory) and NAND chips in its core end markets such as PCs, mobile phones, and data centers. Arcuri highlights that Micron's guidance indicates that nearly all revenue growth for the current quarter will derive from DRAM sales.

Arcuri also notes, "Customers are already placing strategic buys as they seem to see the 'writing on the wall' as to where pricing could go by 2025."

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