Micron Technology stock has been on an incredible run and the only question is how long it can last. The answer, from D.A. Davidson: several years more.
The memory-chip maker’s shares have increased more than sixfold in the past 12 months on surging demand and closed up 2.8% at $518.46 on Wednesday.
D.A. Davidson’s Gil Luria initiated coverage of the stock with a Buy rating and $1,000 price target—the highest of the Wall Street analysts tracked by FactSet.
Micron trades at a notably low forward price-to-earnings ratio—6.1 times, according to FactSet—because the memory-chip industry goes through cycles of boom and bust.
Luria, however, argued fears of the cycle are overblown.
“Artificial intelligence is creating a longer-than-usual memory cycle as compute deployment and demand generation exist in a positive feedback loop, creating a structurally higher ceiling for memory pricing and demand,” he wrote in a research note on Tuesday.
Luria’s target price is based on a price-to-earnings ratio of 10 times his forecast for fiscal 2030 earnings. By then, the DA Davidson forecast assumes revenue of about $393 billion and net income of $160 billion. In fiscal 2025, Micron had revenue of $37.38 billion and net income of $8.54 billion.
The analyst noted that Micron and its rivals SK Hynix and Samsung are signing long-term supply agreements with big customers and selling high-bandwidth memory at higher prices, which could help cement higher margins. Both could justify a permanently higher valuation.
“We are not arguing that the cycle cannot and will not turn,” Luria wrote. [But] “we believe the ceiling is meaningfully higher and more dynamic in the current environment than in any prior cycle, and that the market is still in the early stages of pricing in this structural AI-driven surge in demand.”
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