Bank of America (BofA) raised its price target on Micron (NASDAQ: MU) from $500 to $950 on Wednesday, May 13, while reiterating a ‘Buy’ rating, just as the stock surged 140% year-to-date.
Analyst Vivek Arya expects memory demand to continue outpacing supply as artificial intelligence (AI) driven workloads expand, arguing that the supply-demand sufficiency ratio is unlikely to rise above 110%.
“Despite recent runs in memory stocks, we expect memory demand to continue outgrowing supply driven by Al…. Accordingly, we raise MU estimates and PO to $950 from $500 on a much stronger mid-term pricing outlook,” Arya wrote.
Furthermore, the bank highlighted “structurally lower supply elasticity” in the memory market, adding that it expects memory manufacturers to outperform equipment suppliers over the medium term.
Micron can compete with other AI companies
Pushing the bullish narrative further, the analyst also assigned Micron’s AI and high-bandwidth memory (HBM) business roughly $240 per share based on a 27x earnings multiple in calendar 2027, broadly in line with the company’s competitors in the AI sector.
As stated in the research note, the traditional DRAM and NAND operations are valued at about $710 per share using a 3.1x price-to-book multiple, consistent with prior cyclical peak levels. Thus, BofA expects Micron’s earnings trajectory to remain relatively stable through 2028.
Comparably positive revisions came from DBS, which upped its MU forecast from $636 to $900, as well as D.A. Davidson, whose analyst Gil Luria initiated coverage on the stock with a $1,000 price target on May 11.
Is Micron stock a buy?
As of the time of writing, Micron shares boast a ‘Strong Buy’ Wall Street consensus, with an average price target of $608.33 for the next twelve months, citing numbers retrieved from TipRanks before publication.
The afore-mentioned $1,000 price target issued by D.A. Davidson is currently the highest on Wall Street. For comparison, the lowest one sits at $400.
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