A Rosenblatt analyst reiterated a Buy rating on Micron Technology (NASDAQ:MU) and lifted the target price to $225 from $140, citing an “unprecedented HBM3e/4 memory cycle.” The new target price implies over 100% upside from current MU levels.
“HBM3e alone will drive most of the DRAM structural shortage through calendar 2025, with the new category almost fully allocated for that year,” analysts said in a note.
“Importantly, Micron will move from irrelevant market share in HBM to the low 20s percent on both industry shortages and fundamentally more power-efficient solutions vs. the competition,” they added.
Analysts believe that by the end of FY24, Micron will experience a low-double-digit reduction in wafer capacity from its FY22 peak.
This will result in DRAM (and NAND) supply growth lagging behind the expected mid-teen demand increase in 2024, leading to rising prices throughout the year.
They also foresee a prolonged DRAM up-cycle extending into 2026, driven by the AI server market's shift to more advanced HBM4 technology, which will intensify wafer demand due to its complexity and high-layer stacks.
“Note that accelerator compute (Blackwell/Hopper, MI300, custom ASIC, and such) will not scale without DRAM bit content AND performance (HBM), meaning the category is desperately price inelastic,” the analysts explained.
“The memory cycle we are about to witness will be the biggest in history, driven by an AI cycle that is revolutionizing compute in a secular fashion.”