Micron Technology Inc. (NASDAQ:MU) has surged more than 260% this year, but one analyst says Wall Street still doesn’t understand the company.
Gil Luria of D.A. Davidson raised his price target from $2,100 to a Wall Street-high $3,000 on Wednesday, implying another 176% upside.
“You have an expiry on how long you can be short this stock,” Luria told CNBC Thursday.
Why December 9 Matters
Luria pointed to Dec. 9, when restrictions linked to Micron’s CHIPS Act funding agreements expire, allowing the company to increase share buybacks.
Micron ended fiscal 2026 with $68.3 billion in net cash. CFO Mark Murphy told investors during Micron’s September earnings call that the company intends to return 100% of excess cash to shareholders over time, primarily through repurchases.
Management plans to seek additional buyback authorization beyond the $2.2 billion currently remaining.
“Those are the worst things you can hear as a short seller,” Luria said.
Why Wall Street Hasn’t Caught Up
Luria believes investors still view Micron as the cyclical memory manufacturer of 2023, rather than a company whose products have become essential to artificial intelligence.
He said Micron trades at roughly six times earnings, compared with 40 times or more for Advanced Micro Devices Inc. (NASDAQ:AMD) and Intel Corp. (NASDAQ:INTC).
“That’s one of the biggest dislocations we’ve ever seen,” he said.
Luria also noted that Micron represents just 3% of the Nasdaq-100’s market capitalization but could generate 10% of its earnings over the next year, putting fund managers who are underweight the stock at risk of missing their benchmark.
His $3,000 target values Micron at approximately 19 times estimated fiscal 2027 earnings, reflecting his belief that investors will eventually pay much more for its profits.
“The stock has gone up only on earnings growth. The multiple expansion hasn’t happened yet,” Luria said.
He argues that memory has become critical to AI performance, while long-term customer agreements could make Micron’s earnings more predictable.
Micron has signed 26 multiyear agreements covering more than 35% of its estimated revenue through 2030.
Luria’s case depends on the AI spending cycle holding up. On Polymarket, traders put roughly 6% odds on an AI-industry downturn by December 31, a window covering the buyback date. The contract requires three of six triggers within 90 days, including conditions such as Nvidia shares closing 50% below their all-time high.
Micron shares fell roughly 2% Thursday despite Samsung’s record profit forecast, after gaining 4.1% Wednesday.
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