Micron Technology, Inc. (MU) saw its stock price rise to around $966 on August 14, edging closer to the significant $1,000 mark. The stock has experienced substantial gains this year, skyrocketing nearly 240% compared to the S&P 500’s modest 14% increase. However, it remains over 20% below its peak in late June as emerging competitors, particularly China’s YMTC, gain market share in global NAND shipments.
Despite these challenges, demand within the memory market is exceptionally tight. Much of Micron’s projected capacity for 2027 has already been allocated, largely driven by burgeoning AI applications that surpass existing supply requirements. This context raises questions about the sustainability of Micron’s growth cycle.
New Street analyst Pierre Ferragu upgraded Micron from Neutral to Buy and significantly increased its price target from $949.83 to $1,250, indicating a potential upside of 32%. He posits that traditional valuation methods for Micron are outdated, mainly because AI is transforming both the volume and the nature of memory demand. Ferragu predicts that AI will account for nearly two-thirds of memory requirements by 2030, with the overall demand for memory growing at an annual rate of 15%, compared to 10% historically.
Ferragu also emphasizes the higher valuation premium for High Bandwidth Memory (HBM), noting that it is structurally less cyclical than typical DRAM. Unlike previous memory cycles, he believes the current shortage could persist longer due to increased AI-driven demand and production constraints. Overall, he anticipates that Micron could command a market capitalization between $2 trillion to $3 trillion by 2030, supported by a potential cash generation of over $600 billion.
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