Micron (MU) stock traded around $966 on August 14, according to Yahoo Finance, extending a sharp snapback that pushed its shares back to the psychologically important $1,000 level. Investors are weighing a couple of different signals. For perspective, Micron stock has more than tripled this year, up nearly 240% year-to-date, blowing past the S&P 500's 14% gain, according to Seeking Alpha.
However, the stock is still over 20% below its late-June peak, while fast-growing upstarts like China's YMTC have now overtaken Micron in global NAND shipment share, according to CNBC. At the same time, the underlying memory market remains remarkably tight, with Yahoo Finance reporting that much of Micron's 2027 capacity has already been allocated as AI demand surges past supply. That raises the question surrounding Micron: Is this still another memory cycle destined to reverse?
In a fresh note, New Street's Pierre Ferragu increasingly thinks investors are asking the wrong question while slapping an eye-popping price target on Micron stock, as reported by Investing. 5-star analyst Pierre Ferragu upgraded Micron stock to Buy from Neutral, aggressively raising its price target to $1,250. Nvidia just made a move Wall Street wasn't ready for Microsoft just took sides in AI policy fight OpenAI just disclosed something genuinely alarming Compared to Thursday's closing price at $949.83, the new target implies a superb 32% upside. For decades, the memory space essentially followed a boom-and-bust cycle.
Demand would rise, leading to a pricing explosion, and when memory giants expanded production, oversupply could send prices tanking. Investors knew peak earnings might disappear quickly; they avoided putting high multiples on them. Ferragu feels that the framework is breaking down due to AI.
AI has effectively changed both the quantity and quality of memory demand. HBM isn't simply more DRAM; that's part of another PC cycle. It is an indispensable part of expensive AI accelerators, including the likes of Nvidia, Google, Amazon, Meta, and other giants that require enormous amounts of extremely high-performance memory.
According to New Street, AI would eventually form nearly two-thirds of memory demand. Even beyond 2030, the firm models memory demand growing at an impressive 15% annually, compared with roughly 10% historically. Ferragu argues that unlike DRAM, which is volatile, HBM deserves a valuation premium as it's structurally less cyclical.
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