Investors in Micron Technology (NASDAQ: MU) are used to big swings in the stock price. The shares climbed more than 800% from the end of the first half of 2025 to the end of June 2026. Since then, however, shares have dropped more than 25%, as of this writing.
The roller-coaster ride might not be over. Wall Street analysts predict another big move in Micron's stock price by next summer, based on their price targets. Here's what investors can expect.
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There are 56 analysts covering Micron stock. None of them have a sell rating, and just four have rated it a hold. The rest are all bullish on the stock. As a result, the median price target for the stock on Wall Street is $1,600 per share. That represents an 86% increase in value from the price, as of this writing.
The biggest driver of Micron's profits over the last year or so has been the memory chip supply shortage. Analysts see no sign of that shortage easing anytime soon. Even as Micron and its competitors build new capacity as quickly as they can, the first of their new facilities won't start producing meaningful supply until next year. More will come in 2028 and 2029, but in the meantime, prices for DRAM and NAND chips will continue to rise.
Keybanc analyst John Vinh expects Micron's DRAM prices to climb between 15% and 20% sequentially in the third calendar quarter and another 15% in the fourth quarter. NAND prices could climb even faster, up 30% to 40% this quarter and another 15% in the fourth quarter. He expects high bandwidth memory chips, the kind packaged with GPUs and AI accelerators, to double in price next year. He has a $1,750 price target on the stock.
Analysts are also encouraged by management's ability to strike long-term agreements with customers to lock in pricing years in advance. Micron said it signed strategic customer agreements that will represent about 40% of its revenue once fully executed. For those with pricing bands, the floor is above its peak quarterly margin from past earnings cycles, management said.
Cantor Fitzgerald analyst CJ Muse says such agreements point to a more durable and extended earnings cycle. He has a price target of $2,000 on the stock.
Investors shouldn't take sell-side analysts' price targets as gospel, though. They tend to be an optimistic bunch. Moreover, the spread between the lowest price target on Wall Street ($361) and the highest ($2,200) indicates significant uncertainty about the stock's future.
Micron stock is certainly capable of climbing 86% in a single year. Its recent performance proves just as much. But analyst price targets may be discounting the long-term economics of the memory chip market.
Micron's gross margin soared to 85% in its most recent quarter. That's not a sustainable level for the business, and it's entirely bolstered by the industrywide supply shortage.
Micron's average gross margin as a public company is just 25%. Some argue that structural demand for high bandwidth memory for AI accelerator chips will reduce cyclicality and increase gross margin. Even so, margins will compress over time as supply catches up with demand. What's more, operating costs will increase due to additional overhead from increased output. The result is a significant drop in net income.
Analysts' price targets suggest Micron can greatly exceed its historic gross margin mid-cycle and avoid the worst of the downcycle. That seems predicated on the idea that long-term agreements will prevent a drop in earnings as severe as in past cycles.
There's still a chance, however, that long-term agreements merely pull demand forward, leading to a severe drop-off once contracts expire. So, while they might extend the up cycle, they could also extend the down cycle.
Investors should be cautious. Micron might be able to achieve a higher gross margin than in the past, thanks to AI and demand for high bandwidth memory. However, it's still going to see a severe drop in profits once new manufacturing capacity comes online. If demand for artificial intelligence dries up or even fails to meet expectations, the downcycle could be much worse than Wall Street is modeling right now.
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Adam Levy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy.
Wall Street Analysts Are Predicting a Huge Move for Micron by Mid-2027 was originally published by The Motley Fool