Micron Rides AI Wave With Upgraded Outlook, Analysts See More Gains Ahead
JP Morgan analyst Harlan Sur maintained Micron Technology (NASDAQ:MU) with an Overweight rating and raised the price forecast from $165 to $185 on Monday.
Sur said Micron delivered a positive pre-announcement for its August quarter, raising revenue, gross margin, and EPS guidance on stronger-than-expected DRAM (or dynamic random access memory) pricing across AI/datacenter, smartphone, and PC markets.Micron now expects revenue of $11.2 billion versus its prior $10.70 billion midpoint, adjusted gross margin of 44.5% versus 42%, and adjusted EPS of $2.85 versus $2.50.
Sur attributed the upside to sustained DRAM strength, improved DDR5 and LPDDR5 contract pricing, and robust HBM (or high-bandwidth memory) demand, with HBM revenue nearing an $8 billion annualized run rate.
He highlighted that the HBM3e 12-Hi yield ramp exceeded the 8-Hi ramp and already reached crossover in volume, with visibility to sell out 2026 HBM supply, including HBM3e and HBM4.
Tight supply in non-AI DRAM, partially driven by the HBM trade ratio, adds upward pricing pressure, while DDR4 end-of-life shortages contribute marginally.
Sur expects DRAM pricing strength to continue through 2025 and into 2026, supported by substantial AI capex and constrained leading-edge supply from the HBM4 ramp.
Citing solid execution, improving supply/demand fundamentals, and margin expansion potential, Sur raised his estimates and increased his price forecast from $165 to $185.
His new forecast is based on $17 in annualized earnings power in second-half of 2026, applying a 10–12x P/E multiple consistent with mid-to-late cycle valuations for memory stocks.
He maintained an Overweight rating, seeing Micron well-positioned for fiscal 2026 and calendar 2026, with strong momentum in high-margin businesses and market share gains.
Price Action: MU stock is trading higher by 2.75% to $127.12 at last check on Tuesday.
Image via Shutterstock
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