Micron Technology's (MU.US) highest target price refreshed: $1000! AI demands reconstruction of "storage cycle logic" with profit center rising.

Investment firm DA Davidson has given a "buy" rating to storage manufacturer Micron Technology, Inc. (MU.US) and set a new Wall Street high target price of $1000. The firm's analyst Gil Luria has made a judgment that could disrupt the traditional industry perception - artificial intelligence is fundamentally rewriting not only the supply and demand balance of memory chips, but also the operating rules of the entire industry cycle. The reasoning behind the $1000 target price is based on an analysis framework called a "positive feedback loop." Analyst Gil Luria of DA Davidson pointed out in the report that the logic of the traditional memory cycle is linear: demand growth capacity expansion oversupply price collapse. However, in the AI era, this logic chain has been fundamentally reconstructed. Luria pointed out that there is a self-reinforcing loop between computing deployment and demand generation - every additional deployment of computational power unlocks previously non-existent application scenarios, creating incremental demand that could not be predicted before the infrastructure was built. He bluntly stated in the report: "We do not deny the existence of cycles, but we believe that the duration and scope of the cycles may not have been adequately reflected in the prices." Luria explained that the market is still evaluating Micron's value based on the experience of the "last war", but this AI-driven demand war, in terms of intensity and duration, far exceeds historical reference points. DA Davidson is not the only institution recently to show confidence in Micron. In just a few days, a wave of bullish ratings has unfolded on Wall Street, with target prices showing a clear "staggering rise": In late March, Wells Fargo & Company analyst Aaron Rakers stated that Micron's performance and guidance further confirmed the strong structural growth prospects of the memory market. He raised the stock's target price from $470 to $550 and stated that the company's mid-term earnings per share could reach around $40. Rakers said, "We have long been optimistic about Micron, mainly based on the belief that memory will play an increasingly important role in driving the continuous development of artificial intelligence infrastructure (DRAM + NAND / eSSD). Micron's strategic customer agreement (SCA) further strengthens this view." On April 27, Melius Research analyst Ben Reitzes initiated Micron with a "buy" rating and a target price of $700. The firm believes that the AI memory cycle could continue until the end of this decade, and the market may ultimately assign a higher valuation to the "profitability and demand structure of AI in the HBM, DRAM, and NAND fields." On April 28, TD Cowen analyst Krish Sankar raised Micron's target price from $550 to $660 and maintained a "buy" rating. The firm made a key judgment: the "next journey" of Micron's stock price will be more driven by demand sustainability rather than profit surpassing expectations. "As long as the demand side continues to signal support for sustainability judgments, the stock price can continue to rise." As of now, the majority of analysts covering Micron maintain a "strong buy" rating, with the average Wall Street target price being $574.67, and DA Davidson's target price of $1000 almost doubles this average. Of course, not all institutions are adding positions. In March of this year, Citigroup Inc. lowered Micron's target price by 17% to $425, citing softening short-term memory chip spot prices, but the firm still maintains a "buy" rating. This also reminds the market that even in the super cycle narrative, short-term price fluctuations still exist. Fundamental support: Financial data and the "double endorsement" of long-term contracts Any aggressive pricing ultimately needs to withstand scrutiny of fundamentals. So, does Micron's performance warrant the ambitious $1000 target price? In the second quarter of the 2026 fiscal year, Micron achieved revenue of $23.86 billion, a year-on-year increase of 196.3%, far exceeding the $8.1 billion in the same period a year ago. Gross margin soared to 74.4%, Non-GAAP diluted earnings per share reached $12.1, more than thirty percent higher than the market consensus expectation of $9.0. What shocked the market even more was the company's guidance for the third quarter: revenue midpoint of $33.5 billion, gross margin expected to rise to around 81%, both figures significantly surpassing buyer expectations. This means that the momentum of memory chip price increases is not slowing down, but rather accelerating. Last week, research from Goldman Sachs Group, Inc. showed that Micron alone accounted for about 51% of the upward revision of S&P 500 profit expectations, becoming the core driver of this round of profit expectation revisions. Data shows that the consensus EPS growth for Micron in 2026 is as high as 605%, with its profit forecast being revised up by 93% since February 27, doubling in just a few weeks. Goldman Sachs Group, Inc. pointed out that this change is mainly due to the explosion of AI infrastructure demand and the increase in defense technology spending, driving rapid growth in semiconductor demand, and rapidly reflected in analyst models. Driving this super cycle is an unprecedented gap between supply and demand. On the demand side, Morgan Stanley expects the total global semiconductor market size to reach $1.6 trillion by 2026, a 96% increase over the previous year, with HBM confirmed as the "most severe bottleneck in the near term"; supply is expected to meet only about 2% of the demand in 2026. The HBM market size is expected to skyrocket from around $3 billion in 2023 to $51 billion in 2026. On the supply side, Micron CEO Sanjay Mehrotra has quantified the situation most bluntly: "In the mid-term, we can only meet about 50% to two-thirds of the demand of a few key customers." The company's full-year 2026 HBM production capacity has been fully booked, with prices and quantities locked in. The key variable that could truly rewrite industry rules is the emergence of five-year strategic customer agreements. In March of this year, Micron announced the signing of the storage industry's first five-year strategic long-term contract, which includes clear commitments on sales volume and pricing for multiple years. Subsequently, there were reports in the market that Samsung Electronics and SK Hynix are also negotiating similar long-term agreements with super-scale cloud customers. The transition from one-year contracts to multi-year agreements is significant because it introduces unprecedented visibility of demand and price stability into the storage industry at the institutional level, directly weakening the drastic fluctuations characteristic of traditional cycles. DA Davidson emphasizes this in the report, stating that long-term agreements "provide profit visibility not seen in previous cycles," and quarterly price negotiations make profit maximization possible. Technological moat: Process advantage and the leap in HBM market share The biggest winners of any super cycle are often the players who simultaneously possess technological and scale advantages. Micron is in a favorable position in this regard. DA Davidson explicitly stated in the report that Micron has maintained a process node leadership in the DRAM field for four generations and also three generations in the NAND field. This technological advantage is not static but continuously enhances Micron's cost competitiveness with the launch of each generation of products, allowing it to gain a larger market share in the high-profit data center products category. In the strategically critical HBM race, Micron's pace of catching up is equally remarkable. Data shows that Micron's HBM market share has soared from about 5% in 2024 to around 21% in the second quarter of 2025, surpassing Samsung to become the world's second-largest HBM supplier. In terms of HBM4, Counterpoint Research predicts that Micron will hold about 18% market share in 2026, with SK Hynix leading at 54% and Samsung at 28%. Capacity expansion is also progressing in sync. In February of this year, Micron's packaging and testing factory in Sanand, Gujarat, India officially started operations with a total investment of $2.75 billion. It is expected to assemble and test tens of millions of chips in 2026 and expand capacity to hundreds of millions of chips by 2027. Meanwhile, the company's new factory expansion in the Tainan Copper Mountain Park in Taiwan and a trillion yen-level investment in Hiroshima, Japan are also progressing in parallel. Luria pointed out that Micron is in a process node leadership position in the DRAM, HBM, and NAND fields. This advantage is expected to continue, and with the launch of each generation of products, Micron's cost advantage will continuously increase, allowing it to gain greater market share in the high-profit product category. Lastly, Luria added that looking ahead to the 2030 fiscal year, Micron Technology, Inc. could achieve revenue of up to $393 billion, with adjusted earnings per share reaching $139. In conclusion DA Davidson's $1000 target price is fundamentally a bet on whether AI can truly rewrite the cyclical rules of the storage industry. If the logic of the "positive feedback loop" holds true, if the five-year long-term agreements can become a new paradigm in the industry, if the HBM supply-demand gap indeed compresses to the extreme 2% as predicted by Morgan Stanley, then Micron's current valuation may indeed be significantly undervalued. However, the market's attitude seems to be more cautious. On the day DA Davidson released the $1000 target price, Micron fell by about 2.5% on Tuesday, indicating that the market seems to be voting with its feet: optimism is good, but we need more evidence. As Luria himself summed up - "We are not saying that cycles do not exist, but rather that the length and magnitude of the cycles have not been properly priced." This statement itself is the most accurate footnote for the market at this moment.