U.S. equities were mixed on Friday afternoon, with Micron Technology (NASDAQ:MU) edging lower by 1.2% to $870.66, even as the broader technology sector posted gains. The stock's intraday range exceeded 8%, reflecting heightened volatility in the memory chip space. Over the past two sessions, Micron has lost approximately 2.5%, a modest decline compared to its peers.
Western Digital Corp. (NASDAQ:WDC) tumbled about 17% over the same period, while Sandisk Corp. (NASDAQ:SNDK) slid 9.1%. Seagate Technology Holdings (NASDAQ:STX) fell 3.9%. The selloff was triggered by disappointing reactions to strong earnings from Western Digital and Sandisk, as investors focused on signs that pricing momentum may be slowing.
Citi analyst Atif Malik lowered his price target on Micron to $1,150 from $1,400, while reiterating a Buy rating. Malik noted that both DRAM and NAND prices are expected to decelerate sequentially over the next four quarters, with peak pricing projected for the second quarter of 2027. He also highlighted rising Chinese DRAM and NAND production as a long-term risk.
Despite the bearish price trajectory, Micron's extensive use of long-term pricing contracts has provided a buffer. The company has secured 16 major customer agreements with commitments totaling $22 billion, and its remaining performance obligations stand near $100 billion. These five-year agreements include take-or-pay provisions, deposits, and minimum pricing, which CEO Sanjay Mehrotra said will "significantly enhance the durability and predictability" of Micron's performance.
Investors are weighing the value of these contracts against the cyclical nature of memory prices. Micron's forward price-to-earnings multiple sits at just 5.6 times fiscal 2027 consensus EPS of $154.67, suggesting the market views these earnings as temporary rather than sustainable. The average analyst price target is $1,554.51, implying 78.5% upside from current levels.
Micron's financial metrics remain robust. The company guided fiscal Q4 revenue to $50.0 billion, up 20.6% sequentially, with non-GAAP gross margin around 86% and diluted EPS of $31.00. Capital expenditures for Q4 are projected at approximately $10 billion, a 41% increase from the $7.1 billion spent in Q3.
Wall Street sentiment stays bullish, with no Sell or Underweight ratings among analysts surveyed. However, Citi's target cut underscores concerns about valuation multiples and margin sustainability beyond the current cycle. The market's low forward multiple indicates that investors are still applying a cyclical discount to Micron's peak earnings.
Micron is scheduled to participate in the KeyBanc Technology Leadership Forum on Monday, where management may provide updates on 2027 margin targets, contract coverage, and capital discipline. This will be a key test for investor confidence as the memory cycle approaches its anticipated peak.
