Micron Technology shares extended their recent decline on Tuesday, falling 3.52% to $707, as the memory-chip maker remains under pressure from broader semiconductor selloffs. Despite the drop, KeyBanc analyst John Vinh reiterated his $1,750 price target, implying potential upside of nearly 140% from current levels.
The stock has lost about 28% over the past month, reflecting investor concerns that political shifts could slow AI data center construction and dampen demand for memory chips. However, Vinh points to improving cloud-computing metrics as evidence that demand remains robust.
Cloud data signals resilience
October data showed cloud-computing growth of 2% month-over-month and 12% year-over-year. Vinh described these figures as a “return to strong traditional server growth,” reinforcing his bullish stance on Micron.
Last month, Vinh named Micron one of his top semiconductor picks, citing expectations for fourth-quarter DRAM prices to rise 15% to 20% sequentially. He also highlighted Google’s plans to extend long-term memory supply agreements through 2035, which could provide revenue visibility.
Valuation debate
Vinh’s price target is based on a six-times price-to-earnings multiple applied to his fiscal 2028 earnings estimate. Currently, Micron trades at roughly four times consensus fiscal 2027 earnings, well below its three-year median of nine times.
Some investors caution against using P/E ratios for cyclical memory companies, as earnings can inflate near cycle peaks, making shares appear cheap. However, Vinh and other bulls argue that AI-driven demand could sustain strong earnings for at least another 18 months.
Bank of America trims exposure
Meanwhile, Bank of America removed Micron, Nvidia, and Lam Research from its US 1 list on Tuesday, without providing a reason. The bank maintained Buy ratings on all three, suggesting the move may reflect portfolio rebalancing rather than a negative outlook.
Micron is also participating in Anthropic’s planned private placement alongside its IPO. Anthropic intends to offer 825 million Class A shares at $70 to $78 each, potentially raising up to $62.5 billion and valuing the AI company at as much as $1.02 trillion. Alphabet, Nvidia, AMD, Broadcom, Micron, Microsoft, and TSMC have agreed to participate at the IPO price, highlighting deepening financial ties across the AI industry.
Yardeni sees valuation support
Ed Yardeni, president of Yardeni Research, remains optimistic on semiconductors despite recent declines. He notes that falling stock prices and rising earnings estimates have compressed valuations. The sector’s forward P/E has dropped to 13.1, below the S&P 500’s 18.7 and the information technology sector’s 18.4.
Yardeni says semiconductor valuations have historically bottomed near peaks in earnings growth before recovering as expectations improve. “Such a recovery could cushion stock prices as forward earnings growth moderates to more sustainable levels,” he said. He acknowledges AI investment may face “speed bumps” but believes the trend remains intact.
Overall, while near-term volatility persists, the analyst community remains divided on Micron’s valuation, but the AI demand narrative continues to underpin bullish price targets.
This article is for informational purposes only and does not constitute financial advice.
