BofA sees Micron EPS topping $230 by FY30, calls peak fears overblown

Investing.com -- Bank of America sees Micron Technology (NASDAQ: MU) generating $230+ in earnings per share by fiscal 2030, more than double what Wall Street currently expects at peak.

BofA analyst Vivek Arya reiterated a Buy rating and $1,550 price target on Micron while recently adding the stock to BofA's US 1 List, the firm's highest-conviction ideas. The current price target represents over 50% upside from the current level of $1014.

The note, which draws heavily on SanDisk's recent investor day commitments, argues that consensus is anchoring to the wrong earnings model and that Micron's structural earnings power is fundamentally underappreciated.

The SanDisk investor day is central to BofA's updated framework. SanDisk committed to 15% annual sales growth and greater than 80% gross margins through FY30, backed by customer commitments and supply discipline. Arya applied those same assumptions to Micron and arrived at a FY30 EPS range of $200–$250, implying a 30%-plus EPS compound annual growth rate from FY26 through FY30. That compares to consensus expectations of roughly $160–$170 in peak EPS over the next one to two years, according to BofA's estimate — a gap the firm says reflects a category mistake by the Street.

"The key debate is whether Micron remains a peak-cycle earnings story or is transitioning toward a structurally higher earnings power model," Arya wrote. His answer is the latter. "Memory has historically been viewed as the most cyclical segment of semis, but SNDK's Analyst Day suggests the industry may be entering a more durable phase."

The valuation implication is significant. BofA argues that if Micron's earnings volatility proves structurally lower, the stock deserves to re-rate from its historical 10x P/E multiple toward 12x–15x, more consistent with how the market values AI infrastructure beneficiaries. "We believe the market is underestimating both Micron's future cash generation and its resulting rerating potential," Arya said.

Capital return is a major pillar of that cash generation argument. BofA models more than $80 billion in trailing-twelve-month free cash flow beginning around December 9, 2026, the CHIPS Act anniversary date, and estimates Micron could generate more than $640 billion in cumulative FCF through FY30 under the SanDisk-like framework. At that run rate, the firm says Micron could theoretically repurchase roughly 10% of its market capitalization annually. Current consensus assumes less than half of FCF is deployed toward buybacks, which BofA views as creating meaningful upside to both EPS and stock stability.

Recent anxiety about lower-memory configurations in Rubin Ultra GPU designs has weighed on sentiment toward HBM suppliers, but Arya dismisses those concerns as overstated. HBM4e and HBM5 roadmaps already target 500GB–1TB configurations, he notes, while industry capacity is increasingly migrating to 12-Hi and 16-Hi stacks, trends BofA says more than offset any near-term content headwinds.

The firm is direct about where it sees the real risk. "The primary risk to our thesis is not memory demand, but capital deployment," Arya wrote. The question is whether Micron returns its mounting cash hoard to shareholders or redirects it toward broader ecosystem investments, a path BofA compares to NVIDIA's frontier lab and neocloud strategy. How management answers that question in coming quarters will likely be the sharpest test of the bull thesis.

With the CHIPS Act FCF inflection point now roughly four months away and HBM stack migration accelerating, the next meaningful data points will be Micron's fiscal quarterly results and any updated capital allocation guidance from management.

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