On May 18, Micron’s stock plummeted by nearly 6%. Interestingly, on that same morning, major Wall Street firms were becoming increasingly optimistic about stock valuations. It’s rather unusual to see such a disparity between market performance and analysts’ bullish research notes.
To grasp why Citi almost doubled its price target on a stock that had just experienced a significant drop, you need to consider the current dynamics of the memory market closely.
What Citi Changed for Micron and the Analysts Behind the Conference Call
Analyst Atif Malik at Citi upgraded Micron Technology’s price target from $425 on May 19 to $840 while keeping a buy rating. This revision represents a striking 97.6% increase, nearly doubling the previous target in one update.
The main catalyst for Malik’s revised prediction is Micron’s announcement of a 40% increase in DRAM prices for the second quarter, following a substantial 100% price hike by Samsung in the first quarter. This pricing momentum serves as the foundation for Citi’s optimistic position. Additionally, Malik adjusted his forecast for the fiscal 2026 core EPS upward by about 10% to $58.46.
Other Wall Street Perspectives:
Citi wasn’t alone in its bullish outlook. HSBC also raised Micron’s target from $750 to $1,100. Similarly, Melius Research analyst Ben Reitz updated his target from $700 to $1,100 on the same day. This simultaneous target adjustment across several firms highlights the disconnection between short-term stock price fluctuations and analysts’ confidence in Micron’s long-term earnings growth.
Citi Builds Bullish Case Around DRAM and HBM Theory
Malik’s main argument suggests that the recovery in DRAM isn’t just a 2026 phenomena; it’s more about 2027 as well. Citi believes the upswing will be supported by two interrelated demand factors.
The first factor is the standard DRAM pricing, which has seen a quarterly increase of 58% to 63%. Gartner projects that DRAM prices could rise another 125% by 2026, and Citi thinks the upward trend will continue, rather than stabilize.
The second factor concerns high bandwidth memory (HBM), which is essential for certain GPU-related applications. Citi predicts that HBM prices will also rise in 2027, attributing this to the limited production capacity of major players like SK Hynix, Samsung, and Micron. They expect these manufacturers to maintain supply discipline to avoid a drop in HBM usage in AI-focused operations next year.
The conversation around maintaining that discipline is significant; it implies that the industry may have learned from past experiences where aggressive expansions led to price declines. Sustaining discipline could prolong favorable pricing conditions.
Why the Crash on May 18 Won’t Alter the Medium-Term Outlook
Micron ended the day on May 18 at $681.54, a drop of 5.95%, after reaching an all-time high of $818.67 just days earlier. This decline stemmed from two major factors: first, Samsung’s announcement of aggressive capacity plans, and second, Western Digital’s confirmation that its HDD inventory would be sold out for the remainder of 2026, which some investors misread as a signal for cheaper storage options.
However, this interpretation is somewhat flawed. HDDs and HBM serve distinct roles in AI infrastructures, and HDDs cannot replicate the functionalities of HBM. Citi and other optimistic analysts seemingly share this perspective, suggesting that the stock’s drop reflects investors’ confusion rather than a change in Micron’s underlying fundamentals.
Citi’s Key Numbers and Market Context:
- Citi’s new price target is $840, increasing significantly from $425 and maintaining a buy rating.
- Micron’s DRAM price hike is slated for 40% in the next quarter, following Samsung’s 100% increase.
- The revised FY2026 core EPS stands at $58.46, anticipating the DRAM recovery to hold through 2027.
- HSBC and Melius Research both raised their targets to $1,100.
- Micron’s closing price on May 18 was $681.54, showing a 136.8% increase this year.
- The market capitalization is approaching around $817 billion.
- Contract DRAM prices have seen a quarterly increase of 58%-63%; additional increases of up to 125% are expected in 2026.
What Investors Should Watch As Memory Upcycling Continues
Citi’s target of $840 sits above the average analyst consensus of $612.66. However, it’s also below the market’s peak of $1,100, showcasing varying opinions on how long the favorable price conditions will persist and if supply discipline will be consistently maintained across major manufacturers.
The key point to keep an eye on is how the allocation decisions of HBM capacity among the primary memory producers unfold over the next couple of quarters. If these companies continue to hold back on adding to HBM supply, Citi’s pricing outlook could very well come to fruition. Conversely, if production ramps up, that could undermine the bullish theory.
Micron’s upcoming earnings report in late June will serve as a critical test for Citi’s revised EPS predictions. If Micron achieves a 40% price increase in DRAM during Q2 and provides insight on Q3 pricing, then the $840 target may appear more conservative. On the other hand, if the pricing lags Malik’s expectations, the gap between the current stock price and analyst consensus could narrow—in a negative way. Regardless, the trajectory of the memory market in the next 90 days is critical not just for Micron, but for the entire semiconductor sector.
Related: Micron Sends Unusual Technology Signal to Investors
