Micron's Rally Continues: Analyst Bullish on HBM Demand and DRAM Price Surge

Micron Technology (NASDAQ: MU) shares extended their remarkable rally on Monday, climbing over 5% in midday trading. The latest surge follows a bullish initiation of coverage by Phillip Securities analyst Yik Ban Chong, who set a $500 price target and a buy rating on the stock, citing the company's pivotal role in the high-stakes memory market.

While Micron's performance this year has been largely attributed to optimism around NAND flash memory, Chong's analysis refocuses attention on the DRAM segment—specifically, the high-bandwidth memory (HBM) critical for artificial intelligence systems. "Micron's HBM3E products are seeing exceptional demand," Chong noted, "with designs secured for Nvidia's (NASDAQ: NVDA) Blackwell and AMD's (NASDAQ: AMD) MI355 GPUs." This demand is helping drive industry-wide DRAM prices to levels not seen since 2019.

The analyst's outlook extends further, predicting that Micron's upcoming HBM4 generation will begin capturing market share from rival SK Hynix by late 2026. This timeline coincides with projected massive increases in capital expenditure from major tech clients. Meta Platforms (NASDAQ: META) and Microsoft (NASDAQ: MSFT), for instance, are expected to boost their spending by 76% and 90% respectively in 2026, signaling sustained, robust demand for advanced memory solutions.

Chong forecasts a substantial 56% increase in DRAM prices for fiscal 2026. Despite Micron's stock having skyrocketed more than 360% over the past year, valuation metrics suggest room for growth. While the stock trades at nearly 40 times trailing earnings, its forward price-to-earnings ratio based on next year's projections is around 13, falling to under 11 for 2027 estimates, as margins and sales expand.

The bullish case rests on an expected annual earnings growth rate approaching 60% over the next five years, positioning Micron at the center of the AI infrastructure build-out. However, investors should note that The Motley Fool Stock Advisor service recently listed its top 10 stock picks, and Micron did not make the cut.

Reader Perspectives:

• David Chen, Portfolio Manager: "This isn't just a chip cycle; it's a fundamental re-rating. The HBM technology transition is creating a durable pricing and margin structure for leaders like Micron. The forward multiples are compelling given the growth trajectory."
• Sarah Miller, Independent Investor: "I've held MU for years through the volatility. The focus on HBM finally validates the long-term strategy. The guidance from big cloud spenders like Meta and Microsoft provides incredible visibility."
• Marcus Thorne, Tech Analyst Blog: "Let's pump the brakes. The stock is up 360%! Everyone is extrapolating peak-cycle prices forever. A single analyst's $500 target gets a 5% pop? This feels like momentum chasing, ignoring the historical cyclicality of memory. One hiccup in AI spending and this narrative crumbles."
• Priya Sharma, Engineering Lead: "The technical specifics here are key. Winning designs at Nvidia and AMD isn't trivial; it locks in revenue streams. HBM4's timeline against SK Hynix will be the next major battleground for market share."

Disclosure: The Motley Fool has positions in and recommends Advanced Micro Devices, Meta Platforms, Micron Technology, Microsoft, and Nvidia.