Micron Technology (MU) shares rallied more than 10% on Thursday, rebounding from a recent pullback as renewed investor interest in semiconductor stocks and bullish analyst commentary highlighted the sustained strength of AI-driven memory demand.
The stock recovered sharply after declining roughly 12% over the prior five trading sessions. Despite that correction, Micron remains one of the top-performing semiconductor names this year, with shares up over 212% in 2026.
The move higher came even as rival SK Hynix announced plans to significantly expand wafer production over the next decade. Investors appeared to shrug off the news, focusing instead on the long timeline for capacity additions and the ongoing strength of AI-related demand.
Analysts See AI Extending the Memory Cycle
Wall Street analysts argue that the recent dip in memory stocks does not mark the end of the current upcycle. Morgan Stanley analyst Shawn Kim noted that DRAM remains a critical bottleneck in AI infrastructure, positioning Micron, SK Hynix, and Samsung Electronics to benefit from sustained demand.
“The cycle is still accelerating, earnings revisions remain robust and more sustainable than most believe,” Kim wrote in a Wednesday note. He described the pullback as a necessary reset after substantial gains, adding that “a correction among memory stocks that have had strong run-ups so far this year was inevitable and ultimately healthy if this memory bull market is going to extend” through year-end.
Kim also pointed to growing demand from agentic AI applications and long-term supply agreements between chipmakers and customers as factors that could support higher valuation multiples across the sector.
Wolfe Research analyst Chris Caso echoed that view, arguing that long-term customer agreements could support “better multiples” because future supply expansions are increasingly tied to actual demand forecasts.
Price Targets Surge as Memory Pricing Strengthens
Several brokerages responded to the improving outlook by sharply raising their price targets for Micron. Wolfe Research increased its target to $1,250 from $550 while maintaining an Outperform rating, citing stronger-than-expected memory pricing and increased demand for high-bandwidth memory (HBM), a key component in advanced AI systems.
Wolfe raised its forecasts after estimating approximately 45% growth in memory pricing during Micron’s fiscal third quarter, and expects favorable pricing trends to continue through calendar year 2026.
Daiwa also boosted its price target on Micron to $1,600 from $700, maintaining a Buy rating.
Despite the stock’s strong performance, Micron trades at a relatively modest valuation. According to Dow Jones Market Data, the company trades at roughly 9.4 times forward earnings estimates, making it one of the cheapest stocks in the S&P 500 on that basis.
Supply Constraints Remain a Key Theme
Industry participants continue to point to supply shortages as a major driver of higher memory prices. Memory prices have nearly doubled since February, while lead times have expanded as demand outstrips available supply.
IDC expects those supply constraints to persist for several more years. “We’re not seeing any relief to the memory shortage situation before the end of 2027, which means prices will continue to rise and PC manufacturers will struggle to maintain full product portfolios for the foreseeable future,” said Jean Philippe Bouchard, Vice President of Devices and Consumers at IDC.
Micron is also expanding its manufacturing footprint. The company announced it has selected Bechtel for its semiconductor project in New York, which is expected to support approximately 50,000 jobs, including more than 4,500 construction positions.
As AI-related demand continues to reshape the semiconductor industry, investors are increasingly betting that memory-chip suppliers such as Micron will remain among the sector’s primary beneficiaries. For more on AI-driven semiconductor plays, see Intel Stock Surges 4% After BofA Upgrade, $135 Target on AI CPU Demand and SanDisk Surges on AI Memory Demand, Analyst Price Target Hikes.
This article is for informational purposes only and does not constitute financial advice.
