Micron’s stock has gained a whopping 215.97% year to date. The company’s earnings report for fiscal Q1 2026, released on December 17, helped alleviate the gloomy atmosphere created by Nvidia and Broadcom, which both faced a decline in stock value despite posting very strong earnings reports.
Micron’s report and the guidance the company provided for Q2 turned out to be very strong, and the stock market reacted positively. Micron closed 10.2% higher at $248.55 the day following the earnings release.
Here are the Micron Q1 earnings highlights:
- Revenue of $13.64 billion compared to $8.71 billion for the same period last year
- GAAP net income of $5.24 billion, or $4.60 per diluted share
- Non-GAAP net income of $5.48 billion, or $4.78 per diluted share
- Operating cash flow of $8.41 billion compared to $3.24 billion for the same period last year
Micron provided an outlook for the Q2 fiscal year 2026:
- Revenue of $18.70 billion ± $400 million
- Gross margin of 67.0% ± 1.0%
- Operating expenses of $1.56 billion ± $20 million
- Diluted EPS of $8.19 ± $0.20
Bank of America analyst Vivek Arya and his team provided an opinion on the MU stock following the earnings release.
Micron plans to invest up to $100 billion in its New York megafab.
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Bank of America analysts raise Micron’s stock price target, upgrade rating to buy
The team raised its estimates for Micron’s (MU) pro forma EPS for fiscal years 2026, 2027, and 2028 by 62%, 80%, and 42%, to $31.84, $38.85, and $29.15, respectively.
Analysts noted that key risks for Micron stock include volatility of AI demand, pricing of traditional memory, incremental industry supply, and the chance that the current 68% gross margin and 60% operating profit margin are close to peak levels.
Arya stated that while there may be some volatility in AI demand, HBM is sold out again throughout the calendar year 2026, and customers are engaged in multi-year agreements, which should enable Micron to have a potentially more sustainable upcycle compared to prior cycles.
Analysts noted downside risk factors for Micron:
- Larger-than-expected memory average selling price decline
- Greater competition from China newcomers
- Share loss to large competitors
- Softening of demand across major end markets such as data center,
smartphones, or PCs
In a research note shared with TheStreet, Arya upgraded MU stock rating from neutral to buy, and raised the target price from $250 to $300, based on a 2.3 multiple of his estimate for Micron’s price-to-book ratio for calendar year 2027, which is in the middle/upper range of Micron’s long-term range of 0.8x to 3.1x. Arya added that the price target is based on the assumption that we are potentially in a memory upcycle.
What do other analysts think about MU stock?
Following the earnings report, Morgan Stanley analysts raised the MU stock price target from $338 to $350, and reiterated an overweight (buy equivalent) rating.
According to MarketBeat, the analysts’ consensus is a buy, with 34 analysts giving a buy rating and three giving a hold rating, and the average price target is $282.61.
Goldman Sachs has reiterated its neutral rating and $235.00 price target, following the earnings report, as reported by Investing.com.
Possible problems for the memory upcycle
Chinese memory maker ChangXin Memory Technologies (CXMT) is reportedly planning an IPO for 2026. If the company goes public, it will receive a significant cash boost, which will enhance its growth as well as its ability to catch up with Micron, Samsung, and SK Hynix.
CXMT is expected to begin mass production of HBM3 chips in 2026, which, according to analysts, means that it is about four years behind its competitors, as reported by Tom’s Hardware.
More Tech Stocks:
- Morgan Stanley sets jaw-dropping Micron price target after event
- Nvidia’s China chip problem isn’t what most investors think
- Quantum Computing makes $110 million move nobody saw coming
- Morgan Stanley drops eye-popping Broadcom price target
- Apple analyst sets bold stock target for 2026
Micron is expected to launch its HBM4 in 2026, as reported by DigiTimes. Being that CXMT is one generation behind, I think that the estimate of CXMT being four years behind is a bit optimistic, because reverse engineering a next-gen product takes less time than developing a next-gen product “from scratch.”
Another potential problem for the memory upcycle is the bursting of the AI bubble. As a reminder, Alphabet CEO Sundar Pichaisaid that if the AI bubble bursts, “No company is going to be immune, including us.”
Micron plans to invest up to $100 billion in its New York megafab. If the bubble bursts and AI-driven demand crashes, the megafab will become a problem.
Related: Bank of America resets Oracle stock price target
