What happened

Shares of computer memory-maker Micron Technology (NASDAQ:MU) jumped out of the gate Tuesday, rising as much as 4.6% before turning tail and retreating to a 2.2% gain as of 11:25 a.m. ET. (Which is still respectable, given that the rest of the Nasdaq Stock Market is down about 1%!).

You can thank investment bank Mizuho for the reprieve.

Golden 2022 with a green arrow pointing up.

Image source: Getty Images.

So what

Citing improving demand for memory in personal computers, in servers, and in smartphones as well, Mizuho announced today that it is upgrading shares of Micron stock (and Western Digital (NASDAQ:WDC) stock as well) to buy.

In Mizuho's estimation, Micron stock that costs just over $85 a share today could hit $95 within a year. Western Digital stock that costs just under $60 could be an even better bargain, and worth $75, suggested the analyst in a note on StreetInsider.com.

Now what

Why does Mizuho think this? Well, looking ahead to what might happen in the first quarter of 2022, the analyst previously assumed that PC unit sales would be down 10% to 15% in the first quarter of the new year, but now thinks sales won't fall more than 5%, and could even hold steady against the fourth quarter of 2021 -- then improve as the year goes on, with total sales up 5% by the end of 2022. Server sales are expected to improve even sooner, with Amazon and Alphabet orders potentially returning early in the first quarter, predicts the analyst.

And the forecast for handsets is similarly good. Instead of sales falling 10% sequentially, Mizuho now sees steady sales between Q4 2021 and Q1 2022.

With Micron stock priced at a not-unattractive 16 times trailing earnings, and Western Digital stock looking positively cheap at less than 12 times earnings, both these stocks are positioned to outperform even if the market for computer memory improves only slightly.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.