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AI Fuels Micron Memory Boom: UBS Predicts $400 Target
7 Jan
Summary
- UBS reiterates buy rating and raises Micron's price target to $400.
- AI demand is making memory a strategic asset, not just a commodity.
- Micron faces severe supply shortages, meeting only half of customer demand.
UBS anticipates Micron will significantly benefit from a strong memory cycle fueled by burgeoning artificial intelligence demand. The financial institution has reaffirmed its 'buy' rating for the semiconductor manufacturer and boosted its price target to $400 per share, a notable increase from its previous $300 target. This upward revision signifies a potential 16% gain from recent trading levels.
This optimistic outlook stems from recent investor meetings where Micron management expressed confidence in the current cycle's longevity. Analyst Timothy Arcuri highlighted that investors are underestimating AI's impact, which has transformed memory, particularly dynamic random-access memory (DRAM), into a critical strategic component. This shift is underscored by severe supply shortages, enabling an extended and robust memory upcycle, with Micron reportedly meeting only half to three-quarters of its primary customers' demand.
Arcuri further explained that AI has fundamentally altered customer perceptions, compelling them to treat memory as a strategic differentiator rather than a mere system component. Consequently, suppliers are now rewarded for superior performance, as evidenced by its crucial role in advanced hardware systems like NVIDIA's Blackwell. The analyst also noted that investors are still overlooking the substantial growth in DRAM content within AI servers, as Micron believes DRAM offers a superior value proposition over NAND for individualized, high-quality products.
