TLDR
- Citi raised its price target on Micron to $510 from $430, reiterating a Buy rating after blowout earnings
- UBS also lifted its target to $510 from $475, keeping a Buy rating, but flagged that margin upside may be largely priced in
- Micron reported February quarter revenue of $23.9B and EPS of $12.20, beating estimates by 21% and 36%
- May quarter guidance came in at $33.5B revenue and $19.15 EPS, topping forecasts by 42% and 70%
- Micron signed a five-year customer agreement, longer than UBS expected, signaling strong strategic demand for memory
Micron Technology (MU) had a busy week. The memory maker dropped around 4% in after-hours trading following its earnings report, despite the numbers being well ahead of what Wall Street expected.
That reaction caught some attention. Analysts pointed to two things spooking investors: higher capital expenditure guidance for fiscal year 2027, and concerns about gross margins peaking — Micron guided for 81% gross margins, which is actually higher than Nvidia’s 75%.
Profit-taking after a strong run into the print was likely a factor too. The stock had surged 354% over the past year heading into earnings.
By Friday morning, Micron was down fractionally in premarket trading.
Citi analyst Atif Malik reiterated his Buy rating and raised his price target to $510 from $430. He cited better-than-expected margins as the key driver.
Malik framed the central debate on the stock well. The question investors are wrestling with is whether MU can keep rising alongside higher DRAM prices — like the Windows PC DRAM cycle in the 1990s — on the back of strong AI demand and limited new fab capacity. Or whether prices moderate after a sharp run in Q1.
He said the stock could hold its gains but flagged a near-term rotation into semiconductor capital equipment names given the higher capex outlook.
UBS analyst Timothy Arcuri also raised his price target, lifting it to $510 from $475 while keeping a Buy rating. He acknowledged the strong beat-and-raise quarter but was more measured about what comes next.
Margins and Customer Deals
UBS noted that with gross margin now guided above 80%, much of the upside from further beats and raises may already be in the price. The firm has a historical view that Micron typically peaks around nine months ahead of peak margins.
The firm also flagged new strategic customer agreements Micron signed, which could create near-term margin headwinds. Customers trade some immediate revenue for longer-term supply visibility.
The first agreement has a five-year duration — longer than UBS expected. UBS said customers would only enter deals like this if they viewed memory as strategically critical. The firm believes investors tend to reward stocks for durability, and these deals show lasting structural change.
Strong Numbers Across the Board
The February quarter results were hard to argue with. Revenue hit $23.9 billion and EPS came in at $12.20, beating consensus by 21% and 36% respectively.
May quarter guidance was even more eye-catching. Micron projected revenue of $33.5 billion and EPS of $19.15 — exceeding expectations by 42% and 70%.
Several other analysts raised targets following the print. Cantor Fitzgerald went to $700, Rosenblatt moved to $600, Wolfe Research lifted to $550, and BNP Paribas Exane flagged Micron’s positioning for a multi-year AI data center buildout.
Bernstein SocGen reiterated an Outperform rating, pointing to a rise in average selling prices. Micron’s DRAM and NAND pricing strength was a central theme across analyst notes.
As of Friday, MU was trading at $443.52.
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