Micron (MU.US) was bullish from many major banks before its results: AI demand is booming, and the wave of storage price increases will drive performance

The Zhitong Finance App learned that Micron Technology (MU.US) has become a leader in storage stocks, partly due to its position in the DRAM and HBM chip markets. These two markets are currently expensive and in high demand. This prompted a number of Wall Street investment banks to renew their optimism before Micron Technology announced its latest quarterly results. Micron Technology plans to announce its first-quarter results after the US stock market on December 17. The market generally expected adjusted earnings per share of $3.83. Revenue is expected to be $12.72 billion.

The memory bottleneck has been identified as a growing problem facing high-end AI server vendors, including Dell (DELL.US). Dell said during its third-quarter earnings call that rising memory prices are increasing its costs and that memory shortages are posing challenges. Dell Vice Chairman Jeffrey Clark said, “We are in a very unique time. This is unprecedented. We've never seen costs rise so fast. And it's not just DRAM, it's also NAND.”

Deutsche Bank analysts reaffirmed its “buy” rating and raised the price target from $200 to $280.

The team led by Deutsche Bank analyst Melissa Weathers said in a report to investors on Tuesday: “In 2026, the rise in non-HBM DRAM prices is one of the important drivers of profit growth, but there is still uncertainty about the extent of the price increase. HBM's high silicon wafer usage has absorbed a large amount of wafer production capacity, leading to tight supply in existing production lines. In fact, several industry sources indicate that prices have risen sharply recently, with an increase of more than double digits compared to summer levels.”

Deutsche Bank also raised Micron's earnings per share forecast for fiscal year 2026 by nearly 26%. Currently, the Idaho-based company is expected to report full-year earnings of $20.63 per share, compared to the previous forecast of $16.41. The bank also raised its full-year revenue forecast by 12%, from $53.2 billion to $59.66 billion.

Weathers said, “Overall, we believe Micron is fully prepared to benefit from the upcoming memory cycle. HBM will drive structural changes in the industry, which may improve its valuation level. Furthermore, among memory stocks, we think Micron is particularly attractive because of its unique ability to prioritize profitability over market share in the current environment.”

On Tuesday, HSBC also gave Micron Technology its first “buy” rating and set its target price at $330.

HSBC analyst Ricky Seo wrote in a report to clients: “Micron Technology's stock price has risen 172% so far this year, outperforming the NASDAQ index (up 22%), but recently the stock price has declined somewhat because the market seems to be overly concerned about financial risks from new cloud service providers and the 'Star Gate' project; we believe that cloud service providers that invest with their own EBITDA will maintain strong capital expenditure implementation efforts. We think now is a good time to accumulate this stock.”

After further investigation, Seo said he believes Micron may benefit from a cycle of four to five years, compared to the previous cycle, which only lasted two to three years.

Seo said, “We think Micron will benefit from an upward cycle of 4 to 5 years, which is 2 to 3 years longer than usual. Incremental AI spending from new cloud service providers, 'Stargate' projects, and major cloud service providers should drive this cycle, while limited production capacity will stifle any growth in production. Furthermore, as reasoning becomes more common, demand for general-purpose servers and memory content growth is' strong ', and HBM's continued boom continues, and Nvidia (NVDA.US)'s Rubin Ultra may require 3.5 times more DRAM chips. Finally, the solid-state drive boom for artificial intelligence servers and buffer memory for inference is also driving the memory market. We expect the DRAM and NAND markets to grow 69% and 62% year over year respectively in 2026; Micron will be one of the main beneficiaries.”

Earlier, Goldman Sachs analysts also gave a basically bullish outlook, predicting that its performance would be higher than Wall Street's general expectations. Goldman Sachs's new earnings outlook also prompted it to reconsider its share price targets. It now believes Micron's stock price may rise to $205, higher than the previous target of $180. Goldman Sachs analysts released forecasts before the results. Micron Technology's third-quarter revenue is expected to reach US$13.2 billion, exceeding Wall Street's general expectation of US$12.7 billion. Earnings per share are expected to be US$4.15, which is higher than the average forecast of US$3.83.

Morgan Stanley also expressed a bullish argument in a research report. Morgan Stanley analysts wrote in the research report: “We are entering uncharted territory because we are facing a shortage similar to 2018, but the EPS starting level is much higher; we expect continuous upward correction to continue. Since we upgraded our Micron rating to increase our holdings about a month ago, the DDR5 spot price has tripled. From a historical perspective, to find this increase in DRAM prices, you probably have to go back to the 1990s cycle.”