Key Takeaways:
Micron Technology shares rebounded about 10 percent off their July 29 low of $737.88, as Bank of America reiterated a buy rating and $1,550 price target.
"The recent repricing reflects investors moving early in anticipation of a potential downcycle, rather than a response to fundamentals," Vivek Arya, semiconductor analyst at Bank of America, said.
Arya argues the bears are right about the cycle but wrong about timing, seeing Micron earning $150 in 2028, or at least $100 even pessimistically — well above the prior-cycle peak of about $12 in 2018. At the pessimistic level, the stock trades below nine times earnings.
The stock closed around $877.57, up 191 percent year to date and 692 percent over the past year, with a market value of about $991 billion. Memory supply tightness is expected to persist through 2027, with 2027 DRAM and high-bandwidth memory capacity at Samsung, Micron, and SK Hynix fully allocated.
The stock hit an all-time high of $1,254.80 on June 25 before sliding nearly 40 percent into late July. It now sits about 30 percent below that peak, having reclaimed several short- and medium-term moving averages.
Micron's long-term average price-to-earnings ratio is 20.2 times earnings. Wall Street's consensus projection for fiscal 2027 (ending August 2027) is $155.56 in earnings per share. At 20 times earnings, that would price the stock above $3,100 — turning a $5,000 investment today into more than $19,000. Even at 10 times earnings, the stock would reach $1,555, roughly a double from current levels.
Industry sources cited by DIGITIMES said 2027 DRAM and HBM capacity at Samsung, Micron, and SK Hynix has been fully allocated, with customers receiving only 60 to 70 percent of their initial requests. Goldman Sachs expects the HBM supply-demand gap in 2027 to be tighter than this year, with blended average selling prices for Samsung and SK Hynix rising about 87 percent and 100 percent year over year, respectively, approaching $2.9 per gigabit.
Micron has committed to investing $250 billion in the United States by 2035. Chinese rival ChangXin Memory Technologies, which listed on July 27, has begun supplying DRAM to Apple and major PC makers, though Goldman Sachs said its expansion will primarily target domestic demand and poses limited impact on the tight global supply picture.
The bounce shows investors are treating the late-July selloff as premature rather than a turn in the memory cycle. The next test is whether Micron can break above the $918-$925 resistance zone, which would confirm a shift from rebound to sustained recovery.
This article is for informational purposes only and does not constitute investment advice.
