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As expected, Micron Technologies (MU) delivered another earnings stunner, posting blowout Q2 results.<\/p>\n
Consequently, Bank of America analysts led by Vivek Arya bumped their price target to $500 from $400, underscoring deeper confidence in the memory giant\u2019s long-term outlook.<\/p>\n
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.<\/p>\n
Micron\u2019s glowing Q2 report only strengthened that view, with standout numbers and guidance well above market expectations, suggesting that demand is still outpacing supply.<\/p>\n
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.<\/p>\n
As of writing, Micron (MU) was trading at $436.21 per share, per Yahoo Finance.\u00a0<\/p>\n
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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
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 \u00b1 $750 million
\nCompared with the consensus of $23.27 billion
\nFiscal Q3 gross margin guidance:Approximately 81% on both a GAAP and non-GAAP basisFiscal Q3 operating expenses guidance:
\nGAAP: Approximately $1.60 billion<\/p>\n
Non-GAAP: Approximately $1.40 billion
\nFiscal Q3 diluted EPS guidance:
\nGAAP: $18.90 \u00b1 $0.40<\/p>\n
Non-GAAP: $19.15 \u00b1 $0.40<\/p>\n
Compared with the consensus of $10.77<\/p>\n
Source: Micron Technology investor relations<\/p>\n
Bank of America\u2019s Micron call points to a longer, stronger memory upcycle<\/p>\n
At the heart of BofA\u2019s bullish take on Micron is a fundamental shift in how analysts view memory.<\/p>\n
CEO Sanjay Mehotra offered his take during the Q2 earnings call.<\/p>\n
Here are three key points that stand out from the note.<\/p>\n
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%.<\/p>\n
Micron stock reacts as Bank of America updates its price target after the latest earnings results surprise.<\/p>\n
Green/Bloomberg via Getty Images<\/p>\n
The numbers behind BofA\u2019s 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\u2019s 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.<\/p>\n
With this in mind, BofA analysts believe that Micron\u2019s margins will remain structurally above historical peaks, topping out near 60%.<\/p>\n
The bank isn\u2019t ignoring the near-term risks, though, as we see profit-taking in the stock.<\/p>\n
It sounded the alarm on spot pricing potentially stabilizing and on Micron\u2019s 81% gross margin guidance, marking a peak for this cycle.<\/p>\n
On the margin topic, CFO Mark Murphy pushed back in the Q2 Q\/A session on the call. \u201cYour question about reverting to some historical mean is the thing that should be revisited.\u201d<\/p>\n
\u201cAI is a transformational secular driver,\u201d Murphy added, saying the sector remains supply-constrained beyond 2026.<\/p>\n
Related: Goldman Sachs doubles down on bold S&P 500 forecast<\/p>\n
Also, Micron\u2019s 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.<\/p>\n
The bulk of that is linked to the 2026 increase in cleanroom and facility spending, which will continue to pressure its liquidity position.<\/p>\n
For perspective, per GuruFocus, Micron\u2019s cash-to-debt ratio stands at 0.83, modestly below its 10-year median.<\/p>\n
Wall Street boosts Micron price targets, but flags risks as cycle matures<\/p>\n
Wall Street raved about Micron\u2019s Q2 earnings report, but it wasn\u2019t without some caution.<\/p>\n
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.<\/p>\n
More AI Stocks:<\/p>\n
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<\/p>\n
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.\u00a0<\/p>\n
Not everyone, though, is convinced that it\u2019s only northward from here.<\/p>\n
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.<\/p>\n
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
\nSource: MarketScreener, StreetInsider<\/p>\n
Related: Moody\u2019s delivers blunt verdict on recession<\/p>\n
#Bank #America #revamps #Micron #stock #price #target #post #earnings<\/p>\n","protected":false},"excerpt":{"rendered":"
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