TLDR
- Micron (MU) stock gained 3% Friday after Amazon revealed larger-than-expected AI infrastructure investments
- UBS lifts price target from $400 to $450, expecting memory supply constraints through late 2027
- DRAM and NAND prices rising sharply with quarterly increases of 62% and 40% respectively
- Analyst forecasts Micron earnings will reach $54 per share in 2026 and $75 in 2027
- Stock has surged 327% over the past year as AI server demand drives memory chip shortage
Micron stock climbed 3% Friday following Amazon’s disclosure of increased spending on AI and cloud infrastructure. The memory chip producer has now gained 327% over the trailing year.
Timothy Arcuri from UBS raised his price target to $450 from $400. He maintained a Buy rating on the shares.
The analyst believes the current memory cycle will extend longer than most market participants anticipate. His research shows supply will remain constrained through 2027.
Price Momentum Builds
Recent industry checks confirm memory prices are moving higher across product lines. DRAM contract prices are set to rise 62% from the previous quarter.
NAND memory prices should increase about 40% over the same timeframe. The gains reflect strong demand from companies building AI infrastructure.
Concerns about weak consumer electronics demand have circulated among investors. UBS maintains that AI server orders will easily offset any softness in PCs and smartphones.
Supply chain analysis indicates DRAM will stay undersupplied through Q4 2027. NAND shortages could extend until Q1 2027.
This prolonged period of tight supply supports continued pricing strength. The memory industry has historically experienced volatile cycles.
Past booms saw manufacturers add excessive capacity. The oversupply that followed triggered sharp price crashes.
Arcuri sees little risk of repeating that pattern in the current environment. AI infrastructure buildout shows no signs of slowing.
Competition and Opportunity
Micron battles Samsung Electronics and SK Hynix for market share. The trio dominates global DRAM and NAND production.
High-bandwidth memory chips serve a rapidly expanding market. These specialized products power AI accelerators from companies like Nvidia.
Large technology firms are broadening their supplier networks. Many previously sourced from only two memory manufacturers.
The trend toward three-supplier models creates openings for Micron. UBS expects the company to land new contracts with cloud providers and AI developers.
Some analysts question whether elevated component costs will force device makers to cut memory purchases. Higher prices might also reduce consumer demand for electronics.
UBS rejects these concerns based on infrastructure spending patterns. Hyperscale data center operators continue placing large memory orders.
Financial Outlook Strengthens
UBS revised its earnings estimates higher based on supply dynamics. The firm now projects $54 in earnings per share for 2026.
That figure should grow to $75 per share in 2027. The forecasts assume AI-related demand remains healthy.
Wall Street gives Micron a Strong Buy consensus rating. The tally includes 27 Buy recommendations and 2 Hold ratings from the past three months.
The average analyst price target sits at $384.19. This level suggests about 3% downside from current prices.
Shares traded at $381.96 during early Friday action. The stock slipped 0.2% from Thursday’s closing price.
Micron’s position in high-bandwidth memory continues improving. All major AI chip makers are moving toward diversified supplier bases.
The company competes in both DRAM used in computers and servers. It also produces NAND flash memory found in smartphones and storage devices.
Industry conversations point to memory shortages extending deeper into 2027. DRAM could remain undersupplied through the fourth quarter of that year.
