Micron stock rises as UBS reiterates Buy rating on improved outlook

Micron Technology (MU) significantly raised its fiscal fourth-quarter revenue guidance to $11.2 billion and EPS to $2.85, surpassing prior estimates and consensus, driven by stronger pricing in DRAM and NAND memory chips. This improved outlook, attributed to robust data center and consumer demand, including increased High Bandwidth Memory (HBM) sales, has prompted UBS to reiterate its Buy rating with a $155 price target, alongside other analysts raising their targets. The company's performance signals a stronger and potentially extended memory upcycle, with UBS modeling a modest DRAM and NAND upcycle through Q3 2026.

Analysis

Micron Technology (MU) has significantly upgraded its fiscal fourth-quarter guidance, now projecting revenue of approximately $11.2 billion and earnings per share of $2.85. This revision surpasses both prior company forecasts and consensus analyst estimates of $10.8 billion and $2.52, respectively. The improved outlook is attributed primarily to stronger-than-anticipated pricing power in its core DRAM and NAND memory chip markets, rather than an increase in shipment volumes. This pricing strength is fueled by robust demand from data center and consumer end-markets, alongside increasing requirements for HBM and DDR memory from hyperscalers, which is linked to growth forecasts for NVIDIA. The positive pre-announcement has been met with broad-based approval from Wall Street, with UBS reiterating its Buy rating and $155 price target, and firms like Mizuho, Rosenblatt, and Wolfe raising their targets. UBS has extended its forecast for the memory upcycle to last through the third quarter of 2026. Despite the overwhelmingly bullish sentiment, BofA Securities maintains a Neutral rating, citing consistent shipment expectations as a reason for caution.

Key Decisions for Investors

• Given the significant upward revision in revenue and EPS guidance driven by pricing power, investors should consider that the current memory upcycle may be stronger and more prolonged than previously anticipated, supporting a bullish outlook.
• The primary driver of the improved forecast is pricing, not volume, so investors must closely monitor average selling prices (ASPs) for DRAM and NAND as a key indicator of margin sustainability.
• With the stock up 47% year-to-date and a strong consensus of raised analyst price targets, investors could view current levels as a valid entry or holding point, while also noting the lone 'Neutral' rating from BofA Securities as a factor for risk assessment.
• The rising demand forecast for High Bandwidth Memory (HBM), tied directly to the AI infrastructure build-out via NVIDIA, represents a key long-term growth catalyst that should be factored into any investment thesis for Micron.