Wall Street is optimistic that Micron Technology (MU.US) will “strengthen across the board” and raise the target price to $220

The Zhitong Finance App learned that Wall Street analysts said after Micron Technology (MU.US) announced better-than-expected quarterly results and guidance, that the company is expected to show “overall strength.”

According to financial reports, Micron's Q4 sales increased 46% to reach US$11.3 billion. Analysts had previously estimated it to be around US$11.2 billion. Excluding some special items, earnings per share were $3.03, compared to the average analyst forecast of $2.84. Micron's revenue for the first quarter of fiscal year 2026 is expected to be around US$12.5 billion, exceeding analysts' previous average expectations of US$11.9 billion. Excluding some special items, earnings per share are expected to be around $3.75, exceeding analysts' previous forecast of $3.05.

Wells Fargo analyst Aaron Rakers reiterated Micron's “overbearing” rating and raised the target price from $170 to $220, while raising the expected earnings range from $15-17 to $16-18 per share.

Rakers pointed out that Micron expects its next generation of high-bandwidth memory (HBM) to make strong progress. It has achieved HBM revenue of 2 billion US dollars this quarter, and with HBM4 shipments expected to increase dramatically in the second quarter of 2026, this is beneficial to the company's future development.

He stressed that Micron expects all HBM products to be sold out in the next few months, and has now shipped to 6 HBM customers (4 in the previous quarter), and reiterated that HBM's potential market size will exceed 100 billion US dollars by 2030. Rakers said this reinforces his expectations of exceeding $80 billion in 2028.

Wedbush Securities analyst Matthew Bryson also raised Micron's target price from $200 to $220 after the results were announced. He believes Micron is benefiting from its first “long-term upward cycle” since 2018.

Bryson pointed out that although it is difficult to completely discern how much of the recent rise in demand for hyperscale memory stems from actual demand rather than excessive ordering, positive changes in customer demand may lead to strong growth over a long period of time, especially given the scarcity of available clean room space, making it difficult to expand supply.

He determined that the industry may be on the verge of the first continuous upward cycle since Micron's stock price rose by more than 60% in 2018. If this trend continues, there will be significant room for improvement in the 2026 and 2027 fiscal year prospects.

After the results were announced, several other companies also raised Micron's price targets, including Barclays Bank, KeyBanc Capital Markets, Piper Sandler, Rosenblatt Securities, and Needham.

However, while Morgan Stanley analyst Joseph Moore was pleasantly surprised by HBM's strong performance, believing that it would “ease difficulties in some areas,” it also hinted at potential challenges. Moore maintains a “wait and see” rating for Micron and a target price of $160. Moore also pointed out that the stock price is close to its peak, believing that its stock price is “expensive” in terms of book value, “extremely expensive” in terms of free cash flow indicators, and equally “expensive” in terms of cyclically adjusted earnings.

He pointed out that the price of HBM3e may decline early next year. This is not a major shift in market conditions, but rather reflects that the 2025 pricing was basically determined in 2024, causing the price to be abnormally high at the end of that period.

Meanwhile, competitors have made it clear that profit margins will drop sharply early next year, and HBM's profit premium over traditional DRAM may narrow. Although Micron did not directly respond to the question of whether HBM's profit margin was higher than the company's average, indicating that profit margins will change over time, Moore believes that if profit margins for the February quarter are under pressure, management should have warned in advance, and there are currently no such signals.