Contents
TLDR
- Micron (MU) stock has rallied 327% in the past year, climbing 3% Friday on Amazon’s AI spending news
- UBS raises price target from $400 to $450, citing memory supply shortages extending into 2027
- DRAM prices expected to jump 62% while NAND prices forecast to rise 40% quarter-over-quarter
- Analyst projects earnings of $54 per share in 2026 and $75 per share in 2027
- AI data center demand expected to offset weak consumer electronics sales
Micron stock added 3% on Friday after Amazon revealed plans for increased AI infrastructure investment. The memory chip manufacturer has now posted a 327% gain over the trailing 12 months.
UBS analyst Timothy Arcuri boosted his price target to $450 from $400. He kept his Buy rating unchanged.
Arcuri believes the current memory cycle will last longer than Wall Street anticipates. His research suggests supply constraints will persist deep into 2027.
Supply Tightness Drives Price Increases
Recent industry data points to rising prices across memory products. DRAM contract prices are on track to increase 62% from the prior quarter.
NAND memory prices should climb roughly 40% over the same timeframe. The price gains reflect surging demand from companies building AI infrastructure.
Some market watchers express concern about soft PC and smartphone sales. UBS counters that AI server demand will easily compensate for consumer weakness.
The firm’s checks indicate DRAM supply will remain tight through Q4 2027. NAND shortages could last until Q1 2027.
This extended period of limited supply supports higher pricing power. Memory chip makers have historically struggled with boom-bust cycles.
Previous cycles saw companies add too much capacity during upswings. The resulting oversupply led to sharp price crashes.
Growing High-Bandwidth Memory Market
Micron competes directly with Samsung Electronics and SK Hynix. The three companies dominate both DRAM and NAND markets globally.
High-bandwidth memory chips represent a fast-growing segment. These specialized chips power AI accelerators from Nvidia and other manufacturers.
Major technology companies are diversifying their supplier base. Many are moving from two-supplier strategies to three-supplier models.
This shift creates opportunity for Micron to capture new contracts. UBS believes the company will win additional business from cloud providers and AI customers.
Some analysts worry that high component costs might force device makers to reduce memory purchases. Rising prices could also dampen end-user demand for gadgets.
UBS dismisses these concerns based on robust AI infrastructure spending. The analyst sees minimal risk of a traditional memory market crash.
Earnings Outlook Improves
Based on the supply-demand dynamics, UBS lifted its earnings estimates. The firm now models $54 in earnings per share for 2026.
That figure should grow to $75 per share in 2027. The projections assume continued strength in AI-related memory demand.
Wall Street rates Micron as a Strong Buy. The consensus includes 27 Buy ratings and two Hold ratings from analysts surveyed in the past three months.
The average analyst price target sits at $384.19. That level implies about 3% downside from current trading prices.
Shares changed hands at $381.96 in morning trading Friday, slipping 0.2% from the previous close.
