As investors shift their focus towards the strength of memory-chip demand, Micron Technology, Inc.‘s (NASDAQ:MU) stock has become a “battleground between momentum and duration,” said UBS.
Analyst Timothy Arcuri remains bullish on Micron’s fundamentals, expecting the supply-demand gap in memory chips to widen into next year. He estimates Micron will be able to meet roughly 60% of demand for dynamic random-access memory (DRAM) in 2027, MarketWatch reported, citing a note to clients on Wednesday.
Arcuri also predicts significant growth in bit demand for server double-data rate memory and server and storage solid-state drives in the coming years. The UBS analyst said investors should focus on the "durability of demand" and especially "capital return", as Micron’s long-term supply agreements "mute upside" to revenue estimates.
After restrictions under the 2022 CHIPS and Science Act are lifted, the analyst expects Micron to begin quarterly share repurchases of about $20 billion in the February quarter of 2027, potentially ramping up to $40 billion-$50 billion per quarter. The company is set to report earnings next week, but Arcuri suggests the company may not make significant comments about share buybacks on its earnings call.
DRAM Race Intensifies For Micron
China’s CXMT has begun mass production of fifth-generation DRAM, potentially intensifying competition for Micron in the memory-chip market. The new technology is designed to deliver higher performance while lowering manufacturing costs and power consumption, giving device makers another DRAM supplier.
Last week’s report suggested that Micron is also expanding U.S. memory-chip production to address a global supply shortage, with advanced fabs under construction in Boise, Idaho, and Clay, New York. The capacity race is intensifying as companies including NVIDIA Corp. (NASDAQ: NVDA) and Advanced Micro Devices Inc. (NASDAQ: AMD) seek additional memory supplies. However, a projected shortage of up to 157,000 semiconductor workers by 2030 and difficulty filling engineering roles could slow U.S. expansion, as per the report.
Micron Faces New Bearish Bets
Former hedge fund manager Martin Shkreli said he is now short Micron, reversing his bullish stance from July, when he said, "I like Micron right now." He is betting against the durability of the memory boom as manufacturers add capacity and China’s CXMT ramps up advanced DRAM production. However, Shkreli said a decline in memory prices would be "extremely surprising," indicating he does not believe the cycle has turned yet.
Notably, investor Michael Burry also increased his bearish bets on Micron.
Micron’s DRAM revenue surged 343% year over year to a record $31.3 billion in fiscal third-quarter, but I/O Fund’s Beth Kindig said, "The 343% YoY growth rate recently reported is in the rearview mirror." He argued that slowing growth does not necessarily signal a bust, as tight supply and strong margins could support profits.
Benzinga Edge Stock Rankings shows that MU has a stronger price trend over the short, medium, and long term, with a quality rating of 96.60. Benzinga’s screener allows you to compare MU’s performance with its peers.
Price Action: Over the past year, MU stock has surged about 550%, as per Benzinga Pro. On Wednesday, it closed 2.22% lower at 1,071.88.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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