"A slap in the face to all the bears": Mizuho raises Micron target after improved outlook

RAM maker Micron's improved outlook is a "slap in the face to all the bears," wrote an analyst at Mizuho, after the company announced Aug. 11 increased estimates for revenue, adjusted margin and profit in the current quarter. Micron has reported growing demand for its DRAM memory, and analysts see promise in new HBM memory chips for processors used in AI servers.

On Monday, August 11 Mizuho analyst Jordan Klein raised his target price on Micron shares from $150 to $155 and reiterated a buy recommendation (Outperform rating). The new target is 25% higher than the current quotes. In a note quoted by MarketWatch, the analyst wrote that the company's improved forecast for the fourth quarter was a "slap in the face to all the bears" who did not share his optimism.

The company said Monday that it now expects an adjusted gross margin of 44.5%, up from 42% it previously expected. Also revised forecast for adjusted earnings per share - from $2.5 to $2.85, and for revenue - from $10.7 billion to $11.2 billion. On Wall Street, Micron's revenue in the quarter was estimated at $10.8 billion, notes Investing.com. At the same time, the manufacturer raised its forecast for adjusted operating expenses to $1.22 billion, the previous forecast was $1.2 billion.

The company attributed the new figures to an improving pricing environment, especially in the dynamic random access memory (DRAM) segment, as well as "strong strategy execution."

Micron securities strengthened 4% to $123.7 in Monday trading.

Micron shares were among the leaders of the S&P 500 index in June, after the company posted record results for the third quarter of fiscal 2025, which ended in May. The revenue surge was attributed to a nearly 50% increase in demand for high-bandwidth memory (HBM) products used in artificial intelligence chips such as those from Nvidia. Micron also recorded record sales of DRAM chips used in PCs.

Despite the stock decline in July, some analysts remained positive about Micron's long-term growth drivers related to demand for AI chips, MarketWatch writes. In mid-July, Mizuho analysts noted that Micron has an advantage due to the release of next-generation HBM4 chips, which, according to their estimates, will cost 15-20% more due to the increased size of crystals - the main part of the chip containing memory.

The Mizuho team emphasized that compared to conventional DRAM memory, HBM could deliver a 5x increase in average selling price, which would ultimately lead to improved gross margins - as chip scrap rates fall as chips come off the assembly line and production line utilization increases. At the time, Mizuho noted that Micron "looks better than the competition" and HBM4 chips "are performing well in early-stage testing."

Analysts expect the company to increase its HBM market share in 2026, and cite a forecast from rival memory chip maker SK Hynix: it estimates that the HBM market will grow at an average annual rate of 30% through 2030.

Wall Street reacted positively to Micron's quarterly outlook update, Investing.com reports.

- Rosenblatt Securities reiterated a buy recommendation on the company's stock, expecting it to rise 61% to $200.

- Wolfe Research also maintained a rating equivalent to a "buy" advice with a $160 target, which implies upside potential of nearly 30%.

- Stifel reiterated a buy recommendation and its target at $145.

In total, more than 90% of analysts who follow the company's dynamics advise to invest in shares of Micron, follows from the data of MarketWatch. Only five - out of 41 analysts - hold a neutral rating of Hold, and only one suggests selling these securities (Sell).

This article was AI-translated and verified by a human editor