UBS believes that Micron is poised to benefit from a strong memory cycle driven by artificial intelligence demand. The bank reiterated its buy rating on the semiconductor manufacturer and hiked its price target to $400 from $300 per share. The updated forecast represents upside of 16% from Tuesday’s close. UBS analyst Timothy Arcuri wrote that his price hike took place after hosting a series of bullish investor meetings with Micron management this week, during which the company took a positive stance on the durability of the current cycle. MU 1Y mountain MU 1Y chart “We still believe investors are underappreciating the degree to which AI has fundamentally made memory ([dynamic random access memory] in particular) a more strategic asset,” Arcuri wrote. “Severe supply shortages supportive of an ‘extended and durable’ memory upcycle.” For instance, the analyst noted that Micron is currently only about to meet around 50% to 75% of its key customers’ demand. Meanwhile, artificial intelligence has made Micron’s customers fundamentally change their perception around memory to being a strategic asset from a commodity asset. This has forced clients to rethink how they manage memory procurement, Arcuri added. “While in a pre-AI world memory suppliers did not see much of a return on having a significantly more performant product (as memory was simply a system component), suppliers are now getting paid for best-in-class performance as memory has become a key differentiator within hardware systems (i.e., NVDA’s Blackwell and Blackwell Ultra),” Arcuri wrote. The analyst added that investors are still underappreciating dynamic access random memory, or DRAM, content growth within AI servers. This is true especially as Micron believes that DRAM continues to provide a stronger value proposition than NAND due to its ability to provide more individualized and higher-quality products. Shares of Micron have jumped 237% over the past 12 months.
