Wall Street Analysts Raise Targets on Micron Amid AI-Driven Chip Shortage

Micron US5951121038

Two prominent Wall Street firms significantly upgraded their outlooks for Micron Technology on Wednesday, citing a structural shortage in memory chips fueled by the artificial intelligence boom. While the stock's initial price reaction was muted, the analysts' revised targets point to substantial long-term confidence.

RBC Capital initiated coverage of Micron on January 14 with an "Outperform" rating and a price target of $425. The firm's analysts contend that the current tight supply in DRAM memory is not a temporary issue but a condition expected to persist through 2027. They attribute this to the enormous capital requirements for building out AI infrastructure. RBC projects the company could achieve earnings exceeding $50 per share at the peak of this cycle.

In a concurrent move, Cantor Fitzgerald raised its price target from $350 to $450, maintaining an "Overweight" rating. The bank's assessment aligns with RBC's, forecasting that the supply-demand imbalance will extend into calendar year 2027. With the consensus earnings estimate for 2026 standing at $38 per share, Cantor sees clear potential for Micron to outperform.

Despite the bullish commentary, shares closed Wednesday's session down 1.41% at $333.35. The decline extended in after-hours trading, with the stock shedding an additional $2.

Solid Fundamentals Meet Profit-Taking

The company's recent financial performance provides a strong foundation for the optimism. In its first fiscal quarter, Micron reported revenue surged 56.7% to $13.64 billion. Earnings per share came in at $4.78, soundly beating expectations of $3.77. Management provided guidance for the current quarter of $8.22 to $8.62 per share.

However, this strength has coincided with some selling pressure from insiders and institutional investors. Over the past three months, approximately $72.3 million worth of shares have been sold. Recent reports suggest institutions including Sumitomo Mitsui and Nisa reduced their positions in Q4 2025 and early Q1 2026. With the stock trading just below its 52-week high of $351.23—following a rally of nearly 250% in one year—some investors are evidently locking in gains.

High Bandwidth Memory: A Critical Growth Engine

Micron's valuation is increasingly tied to its position in the High Bandwidth Memory (HBM) market, a specialized memory type for AI accelerators like those from Nvidia. Currently holding a market share of around 21%, Micron trails leader SK Hynix (61%) but is aggressively expanding its capacity.

A key detail underpinning the bullish thesis is that Micron's entire HBM production capacity for 2026 is already sold out. The company is shifting manufacturing resources from consumer products toward these higher-margin AI memory chips. Planned capital expenditures of $20 billion for 2026, a 45% increase year-over-year, underscore a full commitment to this shift. Micron's forward price-to-earnings ratio stands near 11, notably below the industry average of 26.

Near-Term Consolidation Within a Long-Term Uptrend

Technical analysts suggest the $325 level may serve as support in coming sessions. While the long-term perspective remains intact, driven by sold-out capacity and rising contract prices, the stock appears to need a period of short-term consolidation. The next major catalyst is expected to be the production ramp of next-generation HBM4 memory starting in mid-2026. Until then, the share price may continue to oscillate between record earnings expectations and periodic profit-taking by investors.