Micron shares jumped. Its competitor predicted a "supercycle" of chip demand
Micron shares are already up more than 160% since the beginning of the year, but analysts believe the rally will continue
Shares of chip maker Micron Technology jumped on the premarket after South Korea's SK Hynix said a "supercycle" of demand for memory chips has begun amid investment in artificial intelligence. Despite the fact that Micron's securities have already risen more than 160% since the beginning of the year, analysts are raising their target prices one after another, expecting that the AI boom and limited capacity of manufacturers will continue to push memory prices up.
Details
Micron shares added 3.6% in the premarket on Oct. 29 after its biggest competitor in the market - South Korea's SK Hynix, one of Nvidia's key suppliers - predicted the start of a "supercycle" of demand driven by a boom in artificial intelligence investment, Barron's wrote. Micron's value has risen 164% since the beginning of the year.
SK Hynix said that all of its production capacity for next year is already completely sold out. The company added that due to the surge in demand for AI chips, its capacity to produce traditional DRAM memory will be limited.
"This structural DRAM supply shortage is likely to support the current prolonged supercycle in the memory market as production growth lags behind accelerating demand," said DRAM marketing head Kim Kyu-hyun.
In addition, SK Hynix reported a record quarterly operating profit of about $8 billion on October 29, which is 62% more than a year earlier. At the same time, the company's revenue grew by almost 40%.
Micron will release results for its first fiscal quarter of 2026, ending Nov. 30, on Dec. 17.
What does that mean
Micron and SK Hynix are among a handful of companies producing so-called high-bandwidth memory (HBM) chips, a key component of artificial intelligence technology. The latest version of Micron's HBM3e chip is used in Nvidia's high-performance Blackwell graphics processors, which are now seeing a rush of demand, Barron's explains.
What the analysts are saying
Earlier this week, Citigroup analyst Christopher Danley raised his target price on Micron shares by $25 to $275. His estimate implies a 24% increase in the stock relative to the closing price on October 28. The analyst also predicts the largest quarterly increase in DRAM chip prices since the 1990s, helped by strong demand from AI and limited production capacity. These factors, according to his estimate, could provide Micron's earnings growth of about 20%.
On the eve, October 28, Mizuho raised its target price on shares of Micron Technology from $240 to $265, maintaining a buy recommendation (Outperform rating). Its target implies the shares growth by 19.4%.
Of the 39 analysts tracking the company's stock, the majority - 33 - advise buying it, five have a neutral stance and only one advises selling.
This article was AI-translated and verified by a human editor
