Micron’s (NASDAQ:MU) shares have been on an absolute tear this year, climbing by 169%, although the stock has retreated by 10% from the all-time high reached earlier this month.
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The pullback reflects recent market jitters around AI and tech, but on Wednesday, the shares were down for a more specific reason. The stock slipped after Micron executives at the Global Technology Conference hinted that higher capital spending could be coming. In a Wednesday fireside chat in New York, CFO Mark Murphy said Micron’s current $18 billion annual spending pace is likely to come under “pressure,” pointing to market tightness expected to last past 2026 and the company’s long-term customer commitments. At the same time, CTO Scott DeBoer said he’s confident in the company’s technology, noting it’s in the “strongest position in history,” with solid yields on its gamma node and additional product ramps set for the next two years.
While investors seemed to focus on the CapEx issue, UBS’s Timothy Arcuri, an analyst ranked in 7th spot among the thousands of Street stock experts, has a more positive take. Although the company did not positively pre‑announce FQ1 (November quarter) earnings, Arcuri says the “incremental color” offered on the state of the business was “very much consistent” with his latest round of industry checks. Micron now expects supply tightness to last through the end of 2026, a longer timeframe than it projected three months ago, and its HBM supply is fully booked through the end of 2026. “On the back of such tight supply conditions and consistent w/our recent industry checks, we see profitability in core DRAM strengthening even further – leading to DDR gross margin to surpass HBM for the first time in early C2026 even as MU faces (we think) a slightly shallower ramp in HBM revenue versus the past few Qs because of capacity limitations,” the 5-star analyst went on to say.
Even without a pre-announcement, Arcuri thinks Micron is likely running above the high end of its guide. DDR5 contract negotiations are now approaching +20% quarter-over-quarter or more, and in some cases mobile DRAM deals are coming through with ASPs up nearly 40% sequentially.
All told, Arcuri is sticking with his long-standing view that this cycle should prove “more durable,” as HBM continues to “crowd out” the traditional memory market, with the analyst believing that most, if not all, industry capacity additions through 2027 will likely be directed toward HBM.
Bottom line, Arcuri maintained a Buy rating on MU shares and raised his price target from $245 to $275, implying the stock will climb 22% higher in the months ahead. (To watch Arcuri’s track record, click here)
Most analysts are thinking along the same lines here; the stock claims a Strong Buy consensus rating, based on a mix of 26 Buys vs. 3 Holds. However, the $227.14 average target suggests the shares will stay rangebound for the time being. With this in mind, watch out for either more price target hikes – or rating downgrades – shortly. (See Micron stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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