Impressive performance cannot resist the pressure of "good news realization": Micron Technology (MU.US) stock price fell back, analysts fearlessly support the bull market.

On Thursday, after announcing its performance, Micron Technology, Inc. (MU.US) became the focus of the market. Although Wall Street analysts highly praised its performance and guidance, which far exceeded expectations, the company's stock price fell as investors took profits after experiencing a historic rise and feeling cautious due to high-intensity capital expenditure plans. With the surge in AI demand comes a significant increase in capital expenditure. The company expects capital spending to exceed $25 billion in the current fiscal year, higher than the market's previous expectations of $22.4 billion, and anticipates further substantial increases in spending by fiscal year 2027, with additional investments of over $10 billion, particularly in wafer manufacturing. Micron's stock price fell nearly 7% in pre-market trading, but has seen a cumulative increase of over 350% in the past 12 months. Companies like Western Digital Corporation (WDC.US), SanDisk (SNDK.US), and Seagate Technology Holdings PLC (STX.US), which usually follow a similar trend to Micron's stock price, also experienced declines in pre-market trading. Wells Fargo & Company analyst Aaron Rakers stated that Micron's performance and guidance further confirm the strong structural growth prospects in the memory market. He raised the stock's target price from $470 to $550 and suggested that the company's earnings per share could reach around $40 in the medium term. Rakers said, "We have long been optimistic about Micron, primarily based on the belief that memory will play an increasingly important role in driving the continuous development of AI infrastructure (DRAM + NAND / eSSD). Micron's strategic customer agreements further reinforce this view." Bank of America Corp analyst Vivek Arya shares a similar view, also raising the target price of the stock from $400 to $500. "Of particular note, memory prices may remain high for a longer period of time (although eventually stabilizing) due to the following reasons: memory is a key driver of the token economy; the new 5-year SCA is essentially cross-cycle, in addition to traditional 1-year long-term agreements (LTA); and clean rooms may remain restricted around the 2027-2028 fiscal year." Arya added that Micron's earnings per share in fiscal year 2027 could reach as high as $76.50, even though memory spot prices may soon stabilize. He pointed out that spot prices for 16GB DDR4 and DDR5 are currently around $30, while historical prices typically range from $3 to $10. "NAND flash spot market continues to benefit from the expected growth of direct current solid-state drives (eSSD, NVIDIA Corporation KV Cache unloading, etc.), but KV Cache-driven AMAT demand may only account for single-digit percentage of the total NAND flash market," Arya explained. "Similarly, Micron's third quarter gross margin expectation of 81.0% may be nearing cycle peak, ultimately stabilizing at historical highs of 60-70% before the artificial intelligence era." Royal Bank of Canada capital markets analyst Srini Pajjuri stated that the stock price decline may be due to concerns about peak gross margins and increasing capital expenditures, but the outlook is extremely bright. "In terms of demand, the era of artificial intelligence remains strong, with structural drivers (direct current solid-state drives accounting for over 50%, HBM in the DRAM industry accounting for over 20%) playing a greater role in the current upswing cycle," Pajjuri wrote in a report to clients. "Therefore, we expect prices to remain healthy until 2027, and as sustainability becomes evident, we see significant potential for earnings multiple expansions."