TLDR
- Micron (MU) stock surged 327% over the past year and jumped 3% Friday after Amazon’s larger-than-expected AI infrastructure spending announcement
- UBS analyst Timothy Arcuri raised his price target to $450 from $400, maintaining a Buy rating on the stock
- DRAM contract prices expected to rise 62% quarter-over-quarter while NAND prices projected to increase 40%
- Memory supply shortages anticipated to extend into 2027, with DRAM undersupplied through Q4 2027 and NAND until Q1 2027
- UBS projects Micron earnings of $54 per share in 2026 and $75 per share in 2027 as AI data center demand offsets consumer electronics weakness
Micron stock climbed 3% on Friday following Amazon’s announcement of expanded AI infrastructure spending. The memory chip maker has now gained 327% over the past year.
UBS analyst Timothy Arcuri raised his price target to $450 from $400. He maintained a Buy rating on the stock.
The analyst believes the memory cycle will prove stronger and longer than most investors expect. This optimism comes despite concerns about falling memory prices.
Memory Prices Keep Rising
Industry checks show both DRAM and NAND memory prices are moving higher. UBS expects DDR contract prices to jump 62% from the previous quarter.
NAND prices should increase about 40% over the same period. These gains come as demand from AI data centers accelerates.
Many investors worry about weak PC and smartphone demand weighing on memory prices. UBS said AI server demand should more than offset any consumer electronics slowdown.
The firm expects supply to remain tight well into 2027. DRAM could stay undersupplied through the fourth quarter of 2027.
NAND shortages may last until the first quarter of 2027. This extended supply crunch supports the bullish outlook.
High-Bandwidth Memory Opportunity
Micron faces competition from Samsung Electronics and SK Hynix in the memory market. The company competes in both DRAM used in computers and servers and NAND flash memory found in smartphones.
High-bandwidth memory represents a key growth area. These chips are essential for AI accelerators from companies like Nvidia.
Major chip companies are moving toward three-supplier sourcing strategies. This shift opens doors for Micron to win additional business from cloud and AI customers.
Some investors question whether device manufacturers might cut memory requirements due to high component prices. Higher prices could also reduce smartphone and PC demand.
UBS argues that AI data center demand will eclipse these potential headwinds. The analyst sees no risk of the typical memory cycle crash in the near future.
Based on this outlook, UBS raised its earnings forecast. The firm now expects Micron to earn $54 per share in 2026.
Earnings should reach $75 per share in 2027. Wall Street assigns Micron a Strong Buy consensus rating based on 27 Buy ratings and two Hold ratings.
The average price target of $384.19 implies a 2.66% downside from current levels. Micron shares traded at $381.96 in early trading, down 0.2%.
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