Micron Technology (NASDAQ: MU) closed at $981.61 on Friday, declining 1.43% despite gains in major U.S. indexes. The Nasdaq Composite rose 0.31% and the S&P 500 added 0.50%, highlighting the stock's underperformance as investors brace for the company's fiscal third-quarter earnings call on June 24.
The memory chipmaker, now valued near $1.12 trillion, has been a key beneficiary of the artificial intelligence boom, with its high-bandwidth memory (HBM) used in AI accelerators. However, the stock's rapid climb has sparked debate among analysts about whether the current valuation justifies the growth prospects.
Analyst Views Diverge
Goldman Sachs maintained a cautious stance ahead of the earnings report. Analyst James Schneider raised his price target to $900 from $400 but kept a Neutral rating, as reported by Barron's. The note highlighted that Micron had gained 15% in the five sessions prior to Friday's decline. The stock trades at approximately 10.2 times forward earnings, based on the forward price-to-earnings ratio.
In contrast, Wolfe Research lifted its price target to $1,250 from $550, maintaining an Outperform rating. The firm cited tighter DRAM pricing and constrained bit-shipment growth due to cleanroom limitations. DRAM is a primary memory type used in servers, PCs, and other devices, while bit shipments measure total memory volume sold.
Strong Fundamentals but High Expectations
Micron's recent financial performance underscores its sensitivity to AI-related news. The company reported fiscal second-quarter revenue of $23.86 billion, non-GAAP EPS of $12.20, and operating cash flow of $11.90 billion. For the fiscal third quarter, management guided revenue of $33.5 billion, plus or minus $750 million, with gross margins expected around 81%.
"In the AI era, memory has become a strategic asset for our customers," Chairman and CEO Sanjay Mehrotra said in the company's release. The firm's March presentation indicated that both DRAM and NAND (storage memory used in SSDs) will likely remain supply-constrained beyond calendar 2026. Average selling prices surged by a mid-60% range for DRAM and a high-70% range for NAND quarter over quarter in the fiscal second quarter.
Valuation Concerns Loom
Bears argue that the stock price already reflects top-tier results. Investor Kenio Fontes warned that even a solid fiscal Q3 might not satisfy high expectations, as noted by TipRanks. The Street's 12-month average price target stands at $939, suggesting limited upside, though the consensus remains a Strong Buy. Micron's capital expenditures for fiscal 2026 are projected to exceed $25 billion, and the company's guidance excludes trade or geopolitical risks.
As Micron heads into its June 24 earnings call, attention will focus on whether it can meet revenue, gross margin, and earnings targets. Management's updates on HBM capacity, DRAM and NAND pricing, and longer-term contracts will be closely watched. With analyst targets below the current share price, the stock may need more than solid results to sustain its upward momentum. While the AI memory narrative remains intact, the near-term risk appears elevated.
