Bank of America revamps Micron stock price target post earnings

As expected, Micron Technologies (MU) delivered another earnings stunner, posting blowout Q2 results.

Consequently, Bank of America analysts led by Vivek Arya bumped their price target to $500 from $400, underscoring deeper confidence in the memory giant’s long-term outlook.

For BofA, the shift is broad-based and is upending the typical behavior of the memory cycle. For years, the sector was known for wild swings, but now, with supply remaining constrained amid a barrage of AI-driven demand, the script has completely flipped.

Micron’s glowing Q2 report only strengthened that view, with standout numbers and guidance well above market expectations, suggesting that demand is still outpacing supply.

However, despite posting another massive beat-and-raise quarter, Micron stock dropped about 5% in after-hours and trading early Thursday, March 19, according to Reuters.

As of writing, Micron (MU) was trading at $436.21 per share, per Yahoo Finance. 

Nonetheless, Micron has been one of the best-performing stocks in recent months, delivering a superb 161% gain over the past six months and more than 54% year to date, Seeking Alpha noted.

As I covered in my previous article on Micron, Citi raised its price target ahead of earnings, driven by an unusually powerful AI-driven memory cycle and strong DRAM and NAND pricing.

Hence, for now, the current setup feels like much more than just a rebound, and instead points to a far more durable, AI-led upcycle.

Micron Q2 earnings snapshotQ2 non-GAAP EPS:$12.20, beating estimates by $3.54Q2 revenue:$23.86 billion, up 196.4% year over year, beating consensus by $4.56 billionFree cash flow: A record $6.9 billionDividend: Quarterly dividend of $0.15 per shareFiscal Q3 revenue guidance: $33.5 billion ± $750 million
Compared with the consensus of $23.27 billion
Fiscal Q3 gross margin guidance:Approximately 81% on both a GAAP and non-GAAP basisFiscal Q3 operating expenses guidance:
GAAP: Approximately $1.60 billion

Non-GAAP: Approximately $1.40 billion
Fiscal Q3 diluted EPS guidance:
GAAP: $18.90 ± $0.40

Non-GAAP: $19.15 ± $0.40

Compared with the consensus of $10.77

Source: Micron Technology investor relations

Bank of America’s Micron call points to a longer, stronger memory upcycle

At the heart of BofA’s bullish take on Micron is a fundamental shift in how analysts view memory.

CEO Sanjay Mehotra offered his take during the Q2 earnings call.

Here are three key points that stand out from the note.

Pricing power may last longer. Memory is mission-critical to AI infrastructure, and cleanroom capacity is constrained through nearly 2027-2028, limiting how quickly supply can potentially catch up.A new five-year supply agreement changes the playbook. Longer-term deals point to clients focusing on guaranteed supply instead of short-term pricing swings, offering Micron greater visibility than previous cycles.Earnings power is being reset higher. The firm raised its 2026-2028 EPS estimates by 70%-100%.

Micron stock reacts as Bank of America updates its price target after the latest earnings results surprise.

Green/Bloomberg via Getty Images

The numbers behind BofA’s bullish call on MicronBofA reiterated a Buy rating on Micron stock while raising its price target to $500 from $400, a 25% increase.With Micron at $461.73, that new target points to an 8.3% upside.BofA’s EPS model also got a meaningful bump with 2026E EPS of 55.35, up from 8.29 in 2025A and 1.31 in 2024A.The firm also projects 2027E EPS of $77.12 and 2028E EPS of $68.27, with earnings power staying comfortably above prior-year levels.Those estimates sit far above consensus: for 2026E, BofA is at $55.35, compared to $37.54 for Bloomberg consensus and $37.78 for Visible Alpha.The same gap holds in 2027E with BofA forecasting $77.12 EPS compared with $54.81 on Bloomberg and $56.51 on Visible Alpha.Despite the earnings ramp, valuation is compressed, with Micron trading at just 8.3 times 2026 estimated earnings and 6 times 2027 estimated earnings.

With this in mind, BofA analysts believe that Micron’s margins will remain structurally above historical peaks, topping out near 60%.

The bank isn’t ignoring the near-term risks, though, as we see profit-taking in the stock.

It sounded the alarm on spot pricing potentially stabilizing and on Micron’s 81% gross margin guidance, marking a peak for this cycle.

On the margin topic, CFO Mark Murphy pushed back in the Q2 Q/A session on the call. “Your question about reverting to some historical mean is the thing that should be revisited.”

“AI is a transformational secular driver,” Murphy added, saying the sector remains supply-constrained beyond 2026.

Related: Goldman Sachs doubles down on bold S&P 500 forecast

Also, Micron’s ballooning fiscal 2026 capex, which is hovering above $25 billion, will rise meaningfully in fiscal 2027, with construction-related capex alone expected to jump by over $10 billion year over year.

The bulk of that is linked to the 2026 increase in cleanroom and facility spending, which will continue to pressure its liquidity position.

For perspective, per GuruFocus, Micron’s cash-to-debt ratio stands at 0.83, modestly below its 10-year median.

Wall Street boosts Micron price targets, but flags risks as cycle matures

Wall Street raved about Micron’s Q2 earnings report, but it wasn’t without some caution.

For the most part, the consensus is that earnings reinforced the ongoing shift in the memory space, spearheaded by AI demand, tight supply, and robust pricing power.

More AI Stocks:

Morgan Stanley sets jaw-dropping Micron price target after eventBank of America updates Palantir stock forecast after private meetingMorgan Stanley drops eye-popping Broadcom price target

However, compared to past cycles, the current one has much more staying power, especially with relentless data-center demand and long-term supply agreements that add significant visibility. 

Not everyone, though, is convinced that it’s only northward from here.

Some see risks around lofty margins and growing capex, particularly if pricing slows. Nevertheless, the overall view is that Micron is well-positioned, backed by strong fundamentals that support continued growth as the cycle matures.

Wells Fargo:$550, up from $470RBC Capital Markets:$525, up from $425JPMorgan:$550Citigroup:$510, up from $430Mizuho:$530, up from $480Morgan Stanley:$520, up from $450
Source: MarketScreener, StreetInsider

Related: Moody’s delivers blunt verdict on recession

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