Citi anticipates further upside for Micron Technology shares before the SEMICON West conference, lifting its price objective from $1150 to $1300. The firm believes DRAM pricing has outperformed earlier expectations, and with sustained strength in AI demand, there remains room for upside in Micron's results and guidance over the coming quarters. Citi also raised its forecasts for Micron's August and November quarters, primarily due to blended DRAM selling prices exceeding prior assumptions. Citi now projects Micron's fiscal fourth-quarter revenue at $51 billion with earnings per share of $31.45, both above consensus estimates, and contends the company's actual results and subsequent guidance could still surpass expectations when it formally reports.
SEMICON West seen as the next catalyst
Citi views SEMICON West as a pivotal catalyst for Micron's stock, which has experienced significant volatility since its last earnings report, dropping as much as 35% from its prior high before rebounding 34% from a July low. In Citi's assessment, the next phase will refocus market attention on supply and demand dynamics in the memory industry, and SEMICON West offers a window to validate the extent of tightness. The firm expects equipment makers to emphasize shortages across DRAM, multilayer ceramic capacitors, printed circuit boards, and optical components during the event. These shortages not only impact end products but could also constrain the supply of equipment and production tools needed to manufacture memory chips.
Equipment and component constraints cap memory supply growth
Citi argues these supply chain bottlenecks could cap DRAM and NAND supply growth at just over 20%. This is critical because the current challenge in the memory market is not weak demand but rather the possibility that capacity expansion cannot keep pace with AI-driven incremental demand. If equipment, PCBs, optical components, and other key parts remain in short supply, actual supply release will stay limited even if memory makers want to boost capacity. Against a backdrop of rising demand, such supply constraints would further support DRAM and NAND prices.
DRAM and NAND prices poised for continued gains
Citi projects both DRAM and NAND markets will remain undersupplied over the next several quarters, with prices potentially climbing until peaking around the second quarter of 2027. Specifically, Citi now expects blended DRAM average selling prices to rise 20% quarter-over-quarter in the current period, followed by a 13% increase in the next. NAND is forecast to gain even more, with average prices up 34% in the current quarter and another 15% in the following one. This implies Micron's revenue and profit growth will receive strong pricing support in the coming quarters. For memory chip companies, price increases typically translate directly into improved gross margins, so as long as supply tightness persists, Micron's earnings leverage remains high.
AI demand continues to steer the memory cycle
Citi identifies artificial intelligence as the core driver behind the current memory market tightness. AI training and inference require substantial high-bandwidth memory, DRAM, and enterprise storage, and with ongoing data center expansion, related demand is still growing rapidly. In the NAND segment specifically, consumer electronics demand remains weak, but enterprise SSD demand is emerging as a new source of support. Citi expects AI-inference-driven enterprise SSD demand to offset softness in the consumer NAND market. This suggests the current NAND cycle is no longer reliant solely on traditional endpoints like smartphones and PCs, but is increasingly driven by data center and AI infrastructure investment.
Supply tightness remains the key earnings variable for Micron
Overall, the rationale behind Citi's raised price target for Micron centers on persistently tight supply-demand conditions in the memory industry. On one side, AI data center investment continues to drive growth in DRAM and enterprise SSD demand; on the other, equipment and key component shortages limit the release of new capacity. In this environment, DRAM and NAND prices still have room to climb, and as a result, Micron's revenue, profits, and guidance in the coming quarters may continue to exceed expectations. Citi currently forecasts the memory price peak could arrive in the second quarter of 2027, and until then, price increases and constrained supply remain the two fundamental factors underpinning Micron's fundamentals.
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