The $1,000 Micron Bet: Why One Analyst Thinks the Memory Giant Is Still Cheap

Micron's HBM4 chips are sold out through 2026, with analysts raising price targets as revenue surges 196% and gross margins hit 75%.

Micron Technology has kicked off mass production of its HBM4 memory chips, and the response from customers has been unambiguous: every single module the company can make through 2026 is already spoken for. Long-term contracts have locked in revenue visibility stretching 20 months into the future, giving management rare clarity in a notoriously cyclical industry.

The new HBM4 generation delivers 36 gigabytes of capacity per chip with bandwidth exceeding 2.8 terabytes per second, purpose-built for next-generation AI accelerators like Nvidia's Vera Rubin architecture. Power efficiency has improved markedly over the prior HBM3E generation — a critical advantage as hyperscalers wrestle with escalating data center energy costs.

A Price Target That Turns Heads

DA Davidson has initiated coverage with a $1,000 price target, representing roughly a 100% premium to the current share price. The call sounds audacious. The logic behind it is more measured: the analyst argues that AI is extending the memory cycle far beyond historical norms, creating a positive feedback loop between compute expansion and memory demand. The market, in its view, systematically underestimates Micron's strategic position in the semiconductor ecosystem.

TD Cowen has raised its target to $660, while Melius Research started coverage at $700. Of the 43 analysts covering the stock, 38 rate it a Buy or Strong Buy. The average target sits well above current levels.

The valuation case is straightforward. On forward earnings estimates, Micron trades at roughly nine times earnings — a multiple that looks modest for a company growing revenue at triple-digit rates. Second-quarter revenue hit $23.86 billion, up 196% year over year and well ahead of the $19.19 billion consensus. Adjusted earnings per share reached $12.20, with gross margin expanding to 75%.

The HBM Pipeline Is Full

CEO Sanjay Mehrotra has described memory as a "strategic key asset" of the AI era, and the numbers back him up. HBM capacity for the current calendar year is completely sold out. The company began shipping HBM4 in volume during the first quarter, and the order book extends deep into 2027.

The next generation, HBM4E, is already in advanced development with mass production expected in 2027. Meanwhile, Micron is testing modules with even higher memory density. The sold-out production line gives the company a stable foundation as it races to expand capacity.

For the third quarter, management is guiding for revenue of $33.5 billion and gross margin of 81%. Earnings per share are expected at $19.15. Those numbers will either validate the bull case or force a reassessment.

The Stock's Wild Ride

Micron shares closed Thursday at €438.15. The stock has gained 514% over the past twelve months and sits just below its 52-week high. But the nearly 73% volatility reading tells a different story — one of sector-wide jitters that have little to do with Micron's own execution.

The broader AI infrastructure trade has been anything but smooth. Oracle shares dropped roughly 7.5% this week after reports emerged that OpenAI had missed internal revenue and user targets. For Oracle, which signed a $300 billion cloud deal with the AI company, the news hit hard. SoftBank, another OpenAI-linked name, saw its sharpest single-day drop since November before recovering.

Micron has largely been insulated from those crosscurrents. Its customers are Nvidia and AMD, not OpenAI directly. But the episode underscores how quickly sentiment can shift in a sector where valuations are tied to promises as much as profits.

A Structural Shift in Memory Economics

DA Davidson's $1,000 target rests on a thesis that goes beyond the current cycle. The analyst argues that AI is transforming memory from a commoditized component into a strategic asset — one where pricing power and long-term contracts replace the boom-bust dynamics that have historically defined the industry.

Micron's second-quarter results support that view. Revenue of $23.86 billion, gross margin of 75%, and a forward P/E of roughly nine times earnings suggest the market has not fully priced in the structural change. The company's sold-out HBM capacity through 2026 provides a buffer against any near-term demand wobbles.

The third-quarter report, due in the coming weeks, will be the next test. If Micron delivers on its $33.5 billion revenue target and 81% gross margin guidance, the bull case gains more ground. If not, the stock's elevated volatility could reassert itself.

For now, Micron occupies an enviable position: it is the only memory maker with its entire HBM output pre-sold for the next 20 months, and it has a growing roster of Wall Street analysts arguing that the stock still has room to run. The question is whether the market will eventually agree that memory has become something more than a commodity in the AI age.