How Micron Technology, Inc. Shares Gained 14% in August

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What happened

Shares of Micron Technology (NASDAQ: MU) rose 13.7% in August, according to data from S&P Global Market Intelligence. The surge wasn't based on anything the memory chip maker did last month, but on bullish reports from several Wall Street analysts.

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So what

At the close of the Flash Memory Summit conference, where memory suppliers and device builders meet up to discuss the future of the memory industry, I found three Wall Street firms declaring their positive opinions of Micron's stock. These upgrades and price-target hikes were based on stronger-than-expected pricing trends in the markets for DRAM and NAND memory chips. Demand for these chips has been strong throughout 2017 and a small group of leading memory manufacturers -- which includes Micron -- keeps a tight leash on the supply side.

Now what

Analysts clearly like what Micron is doing to stabilize memory prices, even as the capacity to make much larger volumes of memory chips increases unabated. That's still true in September, where another group of analyst firms have kept the stock's momentum going with their bullish reports. Micron shares have gained another 8% in early September, and share prices have more than doubled in 52 weeks.

Micron is not a risk-free investment (there is no such thing). If another price war breaks out, the good times would stop rolling in a hurry. But the volatile days of constant price wars may be behind this cyclical industry at this point, as three companies combine for a 95% grip of the DRAM market. The motivation to shake out smaller and weaker players by flooding the market with extreme production volumes is gone, and this could be the start of a new and much calmer era in the memory chip industry.

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Anders Bylund owns shares of Micron Technology. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.