Micron stock target raised at Baird on higher DRAM pricing assumptions

Investing.com -- Baird lifted its price target on Micron Technology to $1,520 from $1,280 on Monday and kept an Outperform rating on the stock.

The firm’s new target is about 40% above Friday’s close of $1,082.28.

Analyst Tristan Gerra said he is "incrementally positive" on Micron in the near and medium term, citing a surge in demand for AI agents, slower growth in memory chip supply industry-wide next year and higher expected margins on high-bandwidth memory (HBM), a specialized chip used in AI systems.

Gerra said demand for AI agents has pushed Nvidia GPU lead times from six weeks to nearly 40 weeks in the past three months. It is also lifting CPU demand. Baird forecasts AI CPU unit growth of about 40% industrywide in 2027.

Baird said growth in total DRAM supply is expected to slow from more than 30% this year to 20% in 2027, with HBM growing in the 60% range. "Acute shortages are expected to persist in 2027," Gerra wrote.

The firm now expects DRAM contract prices to rise 20% in the third quarter from the previous quarter and another 10% in the fourth quarter. Furthermore, it expects enterprise DDR5 prices, a type of server memory, to climb a further 15% to 20% in the fourth quarter.

Baird expects gross margins on HBM at Micron and SK Hynix to exceed 80% in 2027 and server unit growth to pick up from 18% to 19% this year to 20% to 22% in 2027.

In NAND flash memory, Baird sees prices rising 20% in the third quarter and a further 5% to 10% in the fourth quarter.

Original Article

You May Also Be Interested In

• Micron Technology (MU) PT Raised to $1,520 at Baird
• Goldman warns high-yield bond supply surge pressuring markets
• Popular stocks with increasing option volume: INTC MU SPCX ORCL SOFI AVGO MSTR PLTR GME