Micron’s Memory Magic: Strong Sales Drives Stock Growth Amid Limited Supply
Micron’s stock is currently trading at a reasonable valuation based on fiscal 2026 earnings estimates, despite experiencing significant growth over the past year. Nearly doubling in value, Micron’s shares have been driven by a strong performance from its memory chip supply business. Baird analysts predict there is significant upside potential for the company, with analyst Tristan Gerra recently upgrading the stock from neutral to outperform and setting a price target of $150, representing a 25% increase from the current share price.
One key factor driving Micron’s growth is the increase in selling prices resulting from the limited availability of memory chips. Baird’s research indicates that pricing trends for DRAM, which accounts for a significant portion of Micron’s revenue, are stronger than expected. The growth of artificial intelligence (AI) is also a catalyst for Micron’s success as data centers invest heavily in increasing data capacity, network speed, and processing power to meet the demands of AI. This trend led to a 57% year-over-year increase in revenue in the fiscal 2024 second quarter.
Micron management is optimistic about its future performance, projecting revenue to reach approximately $6.6 billion in the current quarter, up from $3.8 billion in the year-ago period. Profitability is also expected to improve substantially. Analysts forecast earnings to reach $10.05 per share by fiscal 2026 if the stock reaches its price target of $150. This would put it at a forward P/E ratio of 15 based on that estimate, consistent with Micron’s historical average. Baird’s projection suggests that Micron’s stock could continue to perform well over the next 12 to 18 months as AI continues to drive demand for high-bandwidth memory in servers.
