Biggest Micron bulls on Wall Street say they’re even more confident now. Here’s why
Markets are underestimating the long-term need for memory chips in the AI buildout, and shares of chipmaker Micron Technology stand to gain more than 30% from their current level, according to several Wall Street banks. DA Davidson doubled down on a $1,000 price target for Micron on Monday, citing “increased conviction” its buy rating. The stock is higher by close to 8% Monday, to more than $800. MU YTD mountain Micron stock year to date. Analyst Gil Luria at DA Davidson sees a “virtuous cycle” for memory makers supplying infrastructure for large language models, the software underpinning much of AI. Specifically, he thinks that memory chip demand in what’s called the “key value cache” – an intermediate segment of the LLM processing pipeline – will be greater than markets currently expect. “The bigger the models, the more memory they require. That creates more [key value] cache needs, which requires even more memory. The same models with longer context lengths will provide far better intelligence, which requires even more memory. The longer context makes the models better, which will make bigger models possible and the virtuous cycle continues,” Luria wrote. Deutsche Bank also has a $1,000 price target on Micron, which it says is also set to benefit from changing cyclical dynamics in the sector. “Given the strong fundamental backdrop as well as our greater confidence in stable through-cycle [return on investment], we believe the shares should re-rate higher,” Deutsche Bank analyst Melissa Weathers wrote in a report Sunday. Pressure point DA Davidson’s Luria said that memory chips – notably, DRAM – are breaking away from CPUs as the most sensitive pressure point in the current AI buildout. “While the CPU market is getting more crowded with Nvidia and Arm entering the fray as they carve out [Taiwan Semiconductor Manufacturing Co.] capacity, DRAM output is limited to Samsung, SK Hynix and Micron with their own limited production,” he said. Mizuho singled out Micron last week with a similar rationale, arguing that pricing power delta on DRAM and NAND memory would climb well into the triple digits. “Pricing remains a key catalyst in the memory market for 2026E, as we estimate NAND contract pricing potentially up about 510% year over year, while DRAM could also be up about 355% year over year, as demand from AI remains strong and supply stays tight,” Mizuho analyst Vijay Rakesh wrote. Not everyone on the Street agrees on the direction of Micron, however, since memory chip demand is historically volatile. Analysts led by Stacy Rasgon at Bernstein gave Micron an outperform rating with a price target of $510 on Monday – equivalent to more than a 30% drawdown from the current price. Data center capacity Whatever the implications for Micron shares, the AI buildout is showing no sign of slowing down. Data center capacity – poised to double between 2025 and 2030 – is growing in line with demand, according to a Monday analysis by Barclays. “We anticipate record low vacancy and steady rent growth to continue over the next few years. Even as capacity is poised to double, we anticipate the majority of this capacity will be absorbed, and likely pre-leased,” analysts led by Brendan Lynch wrote in a research note. Barclays thinks that data centers will be physically grouped together in the way that many industries tend to gather geographically, rather than having a few huge, centrally managed data centers that serve the bulk of clients. “What started as mega-campus demand has expanded to include more traditional colocation deployments,” Barclays said. “We think [stocks in] our coverage will benefit as enterprise AI accelerates.”
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