Citi raises Micron target price sharply to $840: HBM price will climb again next year, and EPS will break through the 100 yuan mark!

Under the dual effects of surging demand for AI computing power and continuous limited supply, the memory industry is entering a rare super boom cycle and profit revaluation stage.

In a report released on May 18, Citi analyst Atif Malik willMicron TechnologyThe price target was sharply raised to $840 from $425, nearly doubling the gain, and a "buy" rating was maintained. This upgradedThe core logic is that the DRAM super cycle is accelerating into the release phase of price elasticity.

According to the report,High-bandwidth memory (HBM) supply continues to be tight, and pricing is still expected to have upside in 2027.As the production of HBM consumes 3 to 4 times the production capacity of ordinary DRAM wafers, the continuous expansion of HBM will squeeze the supply of ordinary DRAM, thus pushing the price of the latter up. In terms of the specific price increase rhythm,SamsungIt has taken the lead in raising prices in the first quarter of 2026, and Micron plans to follow up with an increase of approximately 40% in the second quarter of 2026.

Based on the upward price trend,Citi simultaneously raised its Micron earnings forecast: core earnings per share (EPS) increased by about 10% to $58.46 for fiscal 2026 and further to $104.56 for fiscal 2027.The new target price of $840 is anchored at approximately 8 times expected 2027 EPS.

Micron follows Samsung's pace as DRAM price increase wave accelerates

This round of price increase is mainly driven by the supply and demand gap of ordinary commercial DRAM (non-HBM). Equipment manufacturersApplied Materials(AMAT)' s silicon system sales outlook shows that the growth rate of DRAM bit supply is expected to be only about 30% by the end of 2026. This increase still can't meet the demand expansion of AI data centers in 2027, and additional new wafer production capacity will be needed in the future.

Citi expects,In 2026, the average price of DRAM increased by approximately 200% year-on-year, and the price of NAND increased by approximately 186% year-on-year, which further confirms that the current memory industry is in a historically strong pricing cycle.

HBM supply continues to be tight, 2027 price increase expectations heat up

The wafer capacity consumed to produce an HBM is about 3 to 4 times that of a normal DRAM. At present, the profit gap between HBM and commercial memory is not enough to drive large-scale conversion or new capacity of memory manufacturers. Therefore, manufacturers generally exercise restraint on the supply side, resulting in continued tight supply of HBM.

It is expected that under the supply-constrained pattern, HBM pricing will still have upside in 2027.At the same time, memory manufacturers will continue to maintain self-disciplined supply management to avoid AI data centers cutting HBM purchases due to excessive costs.

However, demand-side risks cannot be ignored.Cisco(Cisco) has cut DRAM usage by 50% in more than 20 product lines, including wireless products, due to price increase pressure. This case shows that,Excessive memory prices may inhibit the demand of some terminals, and memory manufacturers need to seek a balance between the pace of price increase and demand maintenance.

Significant price target increase, valuation anchors historical price hike cycles

The report expects Micron's core EPS of $104.56 in fiscal 2027, falling back to $80.49 in fiscal 2028, which has reflected the expectation of a cyclical pullback. Free cash flow is expected to be $87.931 billion in fiscal 2027, with a free cash flow yield of approximately 10.6%.