Micron’s stock is currently trading at a reasonable valuation based on fiscal 2026 earnings estimates. Despite trading near $120, with a 52-week high of $130, the demand for high-bandwidth memory in AI servers could lead to further gains for Micron. Baird analysts believe there is significant upside potential for Micron, with one analyst upgrading the stock from neutral to outperform and setting a price target of $150, which represents a 25% increase from the current share price.
The growth of artificial intelligence is a catalyst for Micron’s success. Data centers are investing heavily in increasing data capacity, network speed, and processing power to meet the demands of AI. Micron’s revenue increased by 57% year over year in the fiscal 2024 second quarter due to this trend. One key factor driving Micron’s growth is the increase in selling prices resulting from the limited availability of memory chips. Baird’s research indicates that pricing trends for DRAM, which accounts for a significant portion of Micron’s revenue, are stronger than expected.
Management is optimistic about Micron’s future performance, with revenue projected to reach approximately $6.6 billion in the current quarter, up from $3.8 billion in the year-ago period. Profitability is also expected to improve substantially. Analysts forecast earnings to reach $10.05 per share by fiscal 2026. If the stock reaches the $150 price target, it would be trading at a forward P/E ratio of 15 based on that estimate, consistent with Micron’s historical average. Baird’s projection suggests that Micron’s stock could continue to perform well over the next 12 to 18 months.
