UBS has reiterated its bullish outlook on Micron Technology, maintaining its “Buy” rating and setting a target price at $1,625—implying a potential upside of approximately 61% from current levels. The positive view revolves around the exceptionally strong memory demand, coupled with tight supply dynamics and favorable pricing trends, especially in the High Bandwidth Memory (HBM) segment.
According to UBS, Micron anticipates even tighter memory supply-demand conditions in 2027 compared to 2026. The company is currently able to fulfill less than 50% of its data center customers’ memory requirements, underscoring the robust and possibly persistent demand.
This structural shortage is expected to continue until at least 2027, with significant new DRAM (dynamic random-access memory) supply entering the market mainly in 2028, thereby maintaining upward pressure on prices and supporting the industry’s margins.
UBS analysts further highlight the strength of HBM pricing, projecting average selling prices (ASP) for HBM to rise by about 79% year-on-year in 2027. This surge in ASP is anticipated to drive further margin expansion for Micron, making it a key earnings catalyst.
Financial performance projections remain strong, with UBS forecasting Micron’s earnings per share (EPS) to climb from $74 in fiscal year 2026 to $185 in FY27 and $266 in FY28. This rapid EPS growth sees Micron’s forward price-to-earnings (P/E) ratio dropping to just 5.5x by FY27—a compelling figure for growth-focused investors.
Despite these tailwinds, many investors are still wary of peak margin risks and the longer-term prospects of oversupply after 2028. UBS views this so-called “wall of worry” as an opportunity for contrarian investors, arguing that Micron’s earnings are likely to be more resilient and durable than the market currently anticipates.
