Micron Technology (MU) shares rose in trading on Wednesday.
The gains came as Deutsche Bank became the latest Wall Street firm to raise its price target on the memory-chip maker, citing persistent supply constraints and surging demand from artificial intelligence applications.
The stock gained 2.4% on Wednesday after falling more than 6% in the previous session during a broader technology sell-off.
Micron shares had closed at a record high on Monday and are up more than 223% so far this year.
Analysts increasingly believe the memory-chip maker remains one of the biggest beneficiaries of the AI infrastructure boom, with tight supply conditions expected to support elevated pricing well into next year.
Deutsche Bank sees substantial upside
Deutsche Bank raised its price target on Micron to $1,500 from $1,000 while maintaining a buy rating, implying roughly 47% upside from Tuesday’s closing price.
Analyst Melissa Weathers said recent management commentary and industry trends point to continued strength in the company’s earnings outlook.
“We see strong upward bias to our estimates given management’s intra-quarter commentary around its financial outlook strengthening, continuous strength in memory pricing, and the company’s historical tendency to beat Street revenue estimates,” Weathers wrote in a note to clients.
The bank believes the ongoing memory shortage, exacerbated by growing AI adoption, could continue supporting Micron’s performance for several years.
Brokerages turn bullish as AI demand continues to tighten supply
Other brokerages have also turned increasingly bullish.
TD Cowen and Cantor Fitzgerald recently lifted their price targets to $1,500, while RBC Capital Markets raised its target to $1,200 from $525.
Much of the optimism stems from expectations that AI-related memory requirements will continue to rise as companies deploy larger and more complex computing systems.
TD Cowen analyst Krish Sankar said demand for memory should continue growing even as Nvidia adjusts specifications for some of its AI systems.
According to Sankar, the increasing use of agentic AI will require additional central processing units and supporting infrastructure, boosting memory consumption across data centers.
The resulting demand has strengthened expectations that favorable pricing conditions could persist through the second half of next year.
RBC analyst Srini Pajjuri echoed that view, saying stronger pricing and volume assumptions prompted him to raise his forecasts.
Pajjuri noted that the current upcycle in dynamic random-access memory, or DRAM, has already lasted 12 quarters, exceeding previous industry cycles that typically lasted eight to nine quarters.
He believes the current momentum could continue for another five to six quarters due to strong capital spending trends and expanding AI adoption.
Melius Research analyst Ben Reitzes remains somewhat more cautious than some of his peers but still sees substantial upside.
“The 80% gross margins we’re seeing right now should be around for a while, longer than people think. And then we’re going to get some big buybacks coming in 2027 which could take the stock to new heights,” Reitzes said in a presentation this week.
High-bandwidth memory offers additional support
Analysts are also increasingly focused on high-bandwidth memory, or HBM, which is becoming a critical component in next-generation AI systems.
Pajjuri said HBM deserves a higher valuation multiple because it differs from traditional commodity memory products and is expected to account for a larger share of Micron’s revenue as production ramps up.
He added that HBM should remain largely insulated from the cyclical pricing pressures that have historically affected the memory industry.
Despite efforts by memory manufacturers to expand capacity, supply growth remains constrained by limitations in semiconductor manufacturing facilities.
According to Pajjuri, available clean-room space remains a bottleneck, limiting meaningful supply growth until later next year.
Investors await earnings and contract details
Micron is scheduled to report quarterly earnings on June 24, with investors expected to closely examine whether AI-driven demand continues to support elevated margins.
Long-term customer agreements are likely to be another major focus.
Sankar said investors are looking for greater clarity on strategic customer agreements that provide multiyear commitments and greater visibility into future demand.
Micron disclosed in March that it had signed its first five-year strategic customer agreement, though analysts said management provided limited details regarding pricing terms and profitability guarantees.
Sankar noted that investors will be watching closely to see whether hyperscale customers remain willing to commit to pricing several years in advance.
Any agreements capable of sustaining gross margins above 70% would likely be viewed positively by the market, he said.
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