Micron MU shares fell 1.7% on Tuesday, reversing a small portion of its 10% gains on Monday.
The decline came after a volatile period for semiconductor stocks, with Micron shares having fallen about 20% over two trading days last week, including a 13% plunge on Friday.
Despite the recent pullback, Wall Street analysts remain overwhelmingly optimistic on the memory-chip maker, arguing that surging artificial intelligence demand and tightening supply conditions could support further gains in the years ahead.
AI memory demand fuels industry optimism
The recent rebound in semiconductor stocks followed announcements from Nvidia and SK Hynix about a multi-year strategic partnership.
The two companies plan to develop next-generation AI memory products for Nvidia’s Vera Rubin supercomputers, RTX Spark PCs, and Jetson Thor robotics platforms.
Micron is widely viewed as one of the key beneficiaries of that investment cycle.
The company has already secured certification as a high-bandwidth memory (HBM4) supplier for Nvidia’s Vera Rubin platform and has committed its entire HBM production capacity for the remainder of fiscal 2026 under long-term contracts.
The growing importance of AI workloads has intensified demand for advanced memory products, prompting several analysts to argue that supply will remain constrained for years.
Cantor Fitzgerald analyst CJ Muse raised his price target on Micron to $1,500 from $700 while maintaining an Overweight rating.
Wells Fargo also increased its target to $1,220 from $550 and reiterated its Overweight rating.
Goldman Sachs also lifted its 12-month price target to $900 from $400.
The firm cited tightening supply conditions and accelerating demand for memory chips, while increasing its revenue and non-GAAP earnings-per-share estimates for 2026 and 2027 by an average of 28% and 36%, respectively.
UBS sees earnings exceeding guidance
Among the most bullish voices is UBS analyst Timothy Arcuri, who expects Micron’s upcoming fiscal third-quarter results to exceed the company’s own guidance.
According to UBS, Micron could generate $36 billion in revenue and earnings per share of $20.96 for the May quarter, with much of the upside coming from stronger pricing rather than higher shipment volumes.
The firm’s industry checks indicate that memory pricing continues to rise as AI-related demand tightens market conditions.
UBS expects DRAM revenue to reach $28.1 billion, supported by a 3% increase in bits shipped and a 45% increase in average selling prices compared with the previous quarter.
For NAND memory, the firm forecasts revenue of $7.9 billion, with shipment volumes increasing 5% and average selling prices climbing 50%.
Within the high-bandwidth memory segment, UBS projects revenue of $2.9 billion, while core DRAM revenue excluding HBM is expected to reach $25.2 billion.
Strong pricing outlook drives long-term targets
Looking ahead, UBS believes pricing strength will continue into Micron’s fiscal fourth quarter.
The firm forecasts revenue of $43.1 billion and earnings per share of $25.64 during the period.
Arcuri also expects Micron’s profitability to improve significantly over the coming years.
UBS estimates that the company’s gross margin could potentially approach 90% by the second half of calendar year 2027.
The analyst argues that artificial intelligence is creating structural changes within the memory market that could justify a higher valuation multiple for Micron shares.
Because of these shifts, UBS said it is “only a matter of time” before investors assign Micron a more traditional valuation.
The firm maintained its Buy rating and reiterated a $1,625 price target, underscoring growing confidence that AI-driven demand could support another phase of growth for the memory chipmaker.
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