Micron Technology (NASDAQ: MU) shares surged more than 4% in early trading Tuesday, recovering from the prior session's decline, after KeyBanc Capital Markets raised its price target on the memory-chip maker, citing persistent supply constraints and expectations of sustained price increases across memory markets.
The stock climbed approximately 4.6% to $980.34, bouncing back from a 4.3% drop on Monday amid a broader semiconductor selloff. KeyBanc analyst John Vinh increased his price target to $1,750 from $1,600 following a supply chain visit to Asia, implying roughly 87% upside from Monday's closing price of $937.
Memory Pricing Strength Expected Through 2027
Vinh noted that supply chain checks continue to indicate memory markets will remain tight well into 2027. He wrote, “Memory shortages remain persistent…Supply chain commentary continues to point to a tight memory environment through 2027.” The analyst expects dynamic random-access memory (DRAM) prices to rise 15% to 20% in the third quarter versus the prior quarter, followed by another 15% increase in the fourth quarter. For NAND flash memory, KeyBanc forecasts price increases of 30% to 40% in Q3 and an additional 15% in Q4.
High-bandwidth memory (HBM), the specialized memory used in advanced AI processors, is expected to more than double in price next year, according to Vinh. His valuation is based on a price-to-earnings multiple of nine times his projected fiscal 2027 earnings for Micron.
AI Demand and Long-Term Agreements Bolster Outlook
Micron continues to benefit from rising demand for memory used in artificial intelligence infrastructure, particularly HBM, which is widely deployed alongside advanced AI graphics processing units. During the company's latest earnings call, CEO Sanjay Mehrotra stated that demand for DRAM and NAND chips continues to exceed supply, and the company “expects tight conditions to persist beyond calendar 2027.”
The company has also secured 16 long-term supply agreements with major customers, providing greater revenue visibility and improving production planning. In addition to HBM, Micron sees healthy demand for data-center DRAM products and enterprise solid-state drives. For more context on recent market moves, see our coverage on Micron, AMD, Intel Lead Premarket Chip Rebound as Analysts Reaffirm AI Demand Thesis.
Wall Street Remains Bullish Despite Recent Volatility
Memory-chip stocks have experienced heightened volatility after substantial gains during the AI investment boom. Despite recent weakness, analysts remain largely positive on Micron's outlook. According to FactSet, 89% of the 45 analysts who issued ratings in July recommend buying or strongly buying the stock, with none recommending selling. The average Wall Street price target stands at approximately $1,579.
Despite the rally over the past year, the stock remains about 21% below its 52-week high of $1,255. It currently trades at a forward 12-month price-to-earnings multiple of 6.58, below its one-year high valuation of 17.01. For a broader perspective on the memory sector, see our analysis on SK Hynix ADR Listing: A Stronger AI Memory Play Than Micron or SanDisk and Micron Commits Up to $3B to US Chip Supply Chain; Stock Rises 6% on AI Demand Optimism.
This article is for informational purposes only and does not constitute financial advice.
