TLDR
- Micron shares dropped roughly 2% Thursday morning to $1,046.37 during premarket hours, despite surging nearly 600% in the past year.
- UBS’s Timothy Arcuri maintained his Buy recommendation and increased his price objective to $1,625, pointing to growing memory supply-demand imbalances.
- Citi’s Atif Malik confirmed his Buy stance and boosted his target to $1,300 from $1,150, driven by strengthening DRAM price trends.
- Share repurchase limitations related to Micron’s 2024 Chips Act agreement conclude on Dec. 9.
- The company unveils fiscal Q4 results on Sept. 30, with analysts focused on validating pricing momentum.
Micron Technology shares declined approximately 2% Thursday, hovering around $1,046 during early trading. This retreat follows an extraordinary rally that propelled the stock nearly 600% higher over the trailing twelve months.
Despite the modest pullback, two prominent Wall Street firms remain confident in additional gains. Both UBS’s Timothy Arcuri and Citi’s Atif Malik reaffirmed their Buy recommendations this week, highlighting an increasingly constrained memory semiconductor market.
Arcuri’s outlook is particularly aggressive. He established a price objective of $1,625, derived from applying an eight-times multiple to his earnings projection for the company in 2029.
The Bull Case for Memory Chips
The fundamental argument centers on supply-demand dynamics. Artificial intelligence infrastructure requires massive memory capacity, yet manufacturers are struggling to meet demand.
Arcuri’s recent industry research indicates an expanding mismatch between customer requirements and available inventory. He projects Micron will deliver fiscal Q4 revenue of $52.4 billion when it reports on Sept. 30, alongside earnings per share of $32.50.
Citi’s Malik arrived at similar projections. His model anticipates $51 billion in fourth-quarter revenue and EPS of $31.45, both figures exceeding Wall Street’s consensus estimates.
For the fiscal first quarter of 2027, Malik forecasts revenue reaching $57 billion, with earnings per share advancing to $35.25.
Pricing momentum supports the bullish narrative. Citi currently projects blended DRAM pricing will increase 20% sequentially in fiscal Q4, followed by an additional 13% gain in the subsequent quarter.
Malik anticipates continued undersupply conditions in both DRAM and NAND markets for the foreseeable future, though he expects price appreciation to moderate across the next four quarters. His analysis places the pricing peak around Q2 2027.
Share Repurchase Program on Horizon
An often-overlooked catalyst involves Micron’s current inability to execute substantial share buybacks or distribute special dividends due to stipulations within its 2024 Chips Act funding agreement.
These constraints lift on Dec. 9. Arcuri anticipates Micron could initiate buybacks around $20 billion quarterly, potentially expanding toward $50 billion per quarter by fiscal 2027’s conclusion.
This dual catalyst of pricing strength and capital returns underpins Arcuri’s conviction even in bearish scenarios. He contends that even if spot memory prices plummeted 80% following the current AI-fueled cycle’s endāwhich he expects in late 2028āMicron would still generate higher annualized profits than present levels.
Long-duration supply contracts and the forthcoming repurchase initiative form the foundation of this projection.
Citi is monitoring Micron’s investment strategy as well. The firm projects Micron will allocate approximately $50 billion to capital expenditures in fiscal 2027, with equipment purchases exceeding $20 billion.
Micron’s valuation has surpassed $1 trillion following this year’s remarkable performance. The crucial validation arrives with fiscal Q4 results on Sept. 30, which will reveal whether the anticipated pricing strength is materializing in actual financial performance.
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