DA Davidson Sets Aggressive $1,000 Price Target for Micron Amid AI Boom

DA Davidson has initiated coverage of Micron Technology (MU) with a 'Buy' rating and a bold 12-month price target of $1,000. Analyst Gil Luria argues that the current expansion phase of the memory chip cycle will be significantly longer and more robust than historical cycles. Traditionally, memory chip manufacturers have faced boom-bust cycles characterized by overproduction and subsequent price collapses. However, Luria posits that the build-out of artificial intelligence infrastructure is fundamentally altering this pattern, creating a sustained demand for High Bandwidth Memory (HBM) that is inextricably linked to GPU production. The valuation is based on a projected fiscal 2030 revenue of $393 billion and earnings of $139 per share. Luria applied a price-to-earnings ratio of 10 to these 2030 figures, discounting them back three years at a 10% rate to arrive at the $1,000 target. Micron's recent performance supports the growth narrative, with quarterly revenue nearly tripling to $23.86 billion and gross margins surging from 36.8% to 74.4%. For the third quarter, the company expects revenue between $32.75 billion and $34.25 billion, with margins potentially reaching 81%. Despite the optimistic forecast, the market's immediate reaction was muted, with shares declining on the day the note was published. This suggests investor skepticism regarding the duration of the current cycle, even as Micron shifts toward five-year sales deals to improve earnings visibility.