Micron Earnings to Test How Long AI Memory Shortage Lasts, Analysts Say

The chipmaker makes semiconductor memory and data storage products, including dynamic random-access memory, high bandwidth memory and NAND flash memory. Demand has dramatically outstripped supply because of the artificial intelligence boom, leading to soaring prices and a windfall for memory and storage stocks. That backdrop has lifted Micron shares nearly 280% this year, though the stock remains more than 10% below its June 25 record closing price of about $1,213 per share.

The CNBC Investing Club has a 1-rated buy on Micron, and it is one of Jim Cramer's six stocks to buy this month. The Club added a few additional shares on Sept. 14. After recently visiting Micron headquarters in Boise, Idaho, Cramer was even more convinced that the chipmaker is trading too cheaply at only six times fiscal 2027 earnings estimates. He also said, "The price of memory is going higher, not lower." During the Club's September Monthly Meeting, Cramer said he hopes to see a "monster buyback" announced by Micron CEO Sanjay Mehrotra once its CHIPS Act grant restrictions expire in December.

Analyst sentiment is broadly positive. According to CNBC, 95% of Street analysts have a buy-equivalent rating on the chipmaker, including UBS, Wells Fargo and Citi. UBS wrote Wednesday that "the investor focus should be on durability of demand and especially capital return." While acknowledging buybacks will not happen at Micron immediately, UBS analysts said they will listen carefully for any capital returns commentary. On demand, they said their latest research gives them confidence that critical shortage conditions are not going away soon. "Our latest round of checks points to a gap between supply and demand that continues to widen into calendar 2027," UBS wrote, adding that fulfillment for DRAM is still floating at about 60%. UBS has a $1,625 price target on Micron, implying 50% upside.

Wells Fargo also shared a similar argument Wednesday. Analysts wrote that they expect shares to be driven by further confidence in the duration of memory tightness, expanding strategic customer agreements and Micron's execution, adding that both DRAM and NAND flash memory will continue to outpace supply. Wells Fargo sees Micron's SCAs as an underappreciated source of protection if the memory cycle eventually turns, with roughly 40% of revenue expected to be supported by these minimum pricing commitments. Micron says the contracts cannot be cancelled, and the company uses them to invest in capacity needed to boost output while shielding itself from potential future demand downturns. The memory industry has historically been prone to devastating boom-and-bust cycles. Investors will pay close attention to SCA commentary as a window into future revenues that customers are contractually obligated to pay regardless of market conditions. Wells Fargo lowered its Micron price target to $1,400 from $1,525, citing the ongoing debate over how high Micron's earnings per share will climb.

Citi analysts expect Micron's pricing power to drive upside to quarterly results and guidance. They said Tuesday they expect the stock to rally further as Semicon West approaches. The conference, which brings together chip companies and tech leaders, is slated for Oct. 13 to 15 in San Francisco. Citi expects equipment makers to continue talking about shortages of DRAM and other products. Citi this week raised its Micron price target to $1,300 from $1,150.