Micron Technology Poised for Growth with Strong AI Spending Demand and Rising HBM Demand

Micron Technology (MU) is poised to gain on strong AI spending, according to CLSA analyst Sanjeev Rana. Rana initiated coverage with an Outperform rating and a price target of $155, implying 27% upside from current levels. He sees Micron as a key beneficiary of rising AI spending, pointing to strong demand for high-bandwidth memory (HBM) and steady pricing in DRAM. Rana expects HBM to account for nearly 40% of Micron's DRAM revenue by FY27. Micron has a consensus Strong Buy rating among 28 Wall Street analysts with an average price target of $152.08.

Micron Technology (MU) has been a key beneficiary of the growing demand for high-performance memory solutions, particularly in the artificial intelligence (AI) sector. According to CLSA analyst Sanjeev Rana, Micron is well-positioned to gain from the surge in AI spending, with a price target of $155, implying a 27% upside from current levels [1]. Rana initiated coverage on Micron with an Outperform rating, highlighting the company's strong demand for high-bandwidth memory (HBM) and steady pricing in DRAM.

Rana expects HBM to account for nearly 40% of Micron's DRAM revenue by FY27, up from 21% in FY25. This shift to higher-value memory is expected to lift margins and reduce earnings volatility. On conventional DRAM, supply remains tight as producers shift more wafer capacity to HBM, which uses three to four times more wafers than standard products. This has led to strong DRAM prices, expected to stay robust through 2026 despite seasonal fluctuations [1].

For NAND, Rana sees signs of recovery as demand for enterprise SSDs picks up and suppliers hold back on aggressive spending. Micron's recent financial guidance reflects its ability to capitalize on improving pricing dynamics, with revenue forecast raised to $11.2 billion and gross margins to 44.5% for the August quarter [2].

Micron's stock has a consensus Strong Buy rating among 28 Wall Street analysts, with an average price target of $152.08, implying a 24.66% upside from current levels [1]. The company's strategic alignment with the AI-driven demand surge and robust operational execution make it a compelling investment for long-term investors seeking exposure to the next phase of tech-led growth.

However, Micron faces risks such as softer IT device demand, slower cloud spending, or a quicker ramp-up from Chinese competitors. The memory market's cyclical nature also poses potential challenges. Nevertheless, Micron's balance sheet strength, R&D investments, and strategic partnerships with AI leaders provide a buffer against these headwinds.

In conclusion, Micron Technology's strategic positioning in the AI-driven memory market, combined with bullish analyst outlooks, makes it a standout play for investors with a multi-year horizon. As the world transitions to an AI-first economy, memory will be the unsung hero of this transformation—and Micron is poised to lead the charge.

References:
[1] https://www.tipranks.com/news/micron-stock-mu-poised-to-gain-on-strong-ai-spending-says-top-analyst
[2] https://www.ainvest.com/news/micron-technology-cornerstone-ai-driven-memory-market-growth-cycle-2508/