Memory chips have become the most prized commodity in the artificial intelligence supply chain. And Wall Street is no longer pricing Micron Technology Inc. (NASDAQ:MU) like a boom-and-bust cyclical.
Bank of America reiterated its Buy rating on the stock and raised its price target to $1,550 from $1,500, after what analyst Vivek Arya called “another memorable beat.”
Micron shares rallied roughly 15% on Thursday near $1,180. Bank of America’s new target implies another 31% of upside from there.
A Beat That Reset The Bar
Micron’s fiscal third-quarter revenue surged 346% from a year earlier to $41.5 billion, topping consensus by about 16%.
Adjusted earnings landed at $25.11 a share, up from $1.91 in the same quarter a year ago and roughly 23% ahead of Wall Street estimates.
Non-GAAP gross margin reached 84.9%, far above the roughly 60% margins that marked Micron’s prior cyclical peaks.
Guidance pointed even higher. Micron expects fiscal fourth-quarter revenue of about $50 billion and adjusted earnings near $31 a share, both above where analysts had modeled.
Why Bank Of America Sees A Structural Rerating
The centerpiece of Arya’s bullish case is what Micron calls strategic customer agreements, or SCAs — multiyear contracts that lock in pricing with its largest buyers.
Micron now has 16 of them, up from the prior quarter.
The deals run on five-year terms through 2030 and carry take-or-pay and price-floor provisions, which means Micron gets paid whether or not customers take the full volume.
That visibility, he argues, is the reason memory stocks deserve to trade more like durable franchises than cyclical ones.
Arya sees the stock rerating toward 12 to 15 times earnings, versus the 8 to 10 times memory names have historically commanded.
The firm also believes Micron’s rapidly expanding free cash flow generation creates room for substantially higher shareholder returns in the coming years.
Bank of America raised earnings estimates by 4% to 7% and increased its price objective to $1,550, arguing the stock still trades at an attractive valuation despite its massive rally.
The Anthropic Deal Behind The Thesis
Two days before the print, Micron gave that lock-in a name.
On June 22 Micron and Anthropic PBC unveiled a strategic agreement spanning four layers at once: joint memory and storage design, a multiyear supply deal for high-bandwidth memory, DRAM and solid-state drives, an internal rollout of Anthropic’s Claude across Micron, and a Micron investment in Anthropic’s $65 billion Series H round.
The customer made the demand case itself.
Tom Brown, Anthropic’s co-founder and chief compute officer, said memory and storage are “central to how efficiently we can train and serve Claude.”
The Street’s High End Sits At $2,000
Bank of America is not the most bullish voice on Micron.
According to Benzinga Analyst Ratings, DA Davidson’s Gil Luria and Susquehanna’s Mehdi Hosseini both carry $2,000 targets, the highest published, implying roughly 69% upside from current levels.
Others cluster tighter. Wells Fargo’s Aaron Rakers lifted his target to $1,530. RBC Capital’s Srini Pajjuri and Rosenblatt’s Kevin Cassidy both moved to $1,500.
TD Cowen’s Krish Sankar and KeyBanc’s John Vinh each went to $1,600.
What Could Still Go Wrong
Elevated memory prices act as a tax on the very AI customers driving demand — BofA pegs memory at about 35% of AI capital spending — and could eventually crimp appetite in price-sensitive markets like phones and autos.
BofA also concedes gross margins may be near a peak, modeling a high-80% top before some normalization.
The question now is not whether Micron is having a historic year. The numbers settle that.
It is whether a market that has spent decades treating memory as the most cyclical corner of semiconductors is finally willing to pay up for permanence.
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