TLDR
- Dell’s COO said AI server demand is being held back by DRAM and NAND memory shortages, naming memory constraints three times on an earnings call.
- DRAM contract prices are set to rise over 50% this quarter, with NAND flash prices expected to climb 60%, per Susquehanna analysis.
- MU stock is down over 13% in the past three months despite these supply signals, and was down around 1.4% in premarket trading Wednesday.
- A potential strike at Micron’s Taiwan plants could further tighten global memory supply, with around 80% of union members voting in support.
- Analysts hold a Buy consensus on MU with an average price target of $1,521.74, ahead of its September 30 earnings report.
Micron Technology (MU) stock barely moved in premarket trading Wednesday, slipping around 1.4% to $920.06, even as fresh evidence of a deepening memory chip shortage mounted.
Dell Technologies reported earnings late Tuesday and its COO Jeffrey Clarke gave analysts a blunt read on supply conditions. “The constraints remain the same. DRAM, DRAM, DRAM, followed by NAND, NAND, NAND,” Clarke said on the call. Dell said demand for its AI servers was outstripping supply, with memory the main bottleneck.
That kind of commentary is exactly what Micron bulls have been waiting for. DRAM accounts for roughly three quarters of Micron’s revenue, and contract prices for the chip type are forecast to rise more than 50% this quarter versus the prior quarter, according to Susquehanna. NAND flash memory prices are set to jump 60%.
Yet MU has struggled to gain traction. The stock is down more than 13% over the past three months, though it has gained nearly 700% over the past 12 months.
Supply Squeeze Getting Tighter
The supply picture may be about to get even tighter. Micron’s Taiwan operations are facing a potential labor strike, with around 80% of union members at its Taoyuan and Taichung plants voting in favor of strike action over bonus compensation. Micron Taiwan said it plans to share details of its Incentive Pay Plan in October and is continuing to communicate with workers.
Industry sources warn that any work stoppage would further squeeze global memory supply at a time when demand is already running ahead of available stock.
Former Nvidia executive Jeff Herbst added more color, saying AI computing demand continues to outpace memory supply and that Samsung, SK Hynix, and Micron are all running at capacity. He also pointed out that new fabrication plants take years to build, which he expects will keep prices elevated for some time.
Tariff Risk Hangs Over the Sector
On the policy side, the Trump administration is weighing new semiconductor tariffs that could cover laptops, gaming consoles, and data center servers. President Trump has publicly praised Micron’s U.S. expansion, including a $10 billion research investment and a $250 billion domestic manufacturing commitment. Micron is the only U.S.-based producer of high-bandwidth memory, a detail the administration views as important for AI supply chain security.
Still, tech companies have flagged that tariffs could raise costs and slow AI infrastructure spending.
Earnings in Focus
Micron’s next major catalyst is its fiscal fourth-quarter earnings report on September 30. Wall Street is projecting EPS of $31.26, up from $3.03 a year ago, and revenue of $50.78 billion, compared to $11.31 billion in the year-ago period. The stock trades at a forward P/E of around 6x on some estimates, though other metrics put it closer to 21x.
Analyst sentiment remains firmly positive. Mizuho rates the stock Outperform with a $1,300 target. New Street Research upgraded to Buy in August with a $1,250 target. Citigroup holds a Buy rating with a $1,150 target. The consensus average price forecast sits at $1,521.7
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