Micron Technology MU shares climbed on Friday after New Street upgraded the memory-chip maker to ‘Buy’, arguing that artificial intelligence could transform the company into a $2 trillion to $3 trillion business by the end of the decade.
New Street raised its rating from Neutral to Buy and set a price target of $1,250, implying roughly 29% upside from current levels. Micron stock was up 1.3% in trading, giving the company a market capitalization of around $1 trillion.
The bullish outlook comes as analysts increasingly expect AI-driven demand for memory chips to reshape the industry’s long-term growth trajectory while making earnings less cyclical than in previous decades.
AI demand expected to reshape memory market
New Street said Micron remains attractively valued despite its recent rally, citing the company’s price-to-cost-of-goods-sold ratio as evidence that the shares still offer value.
The stock has already gained more than 10% over the past five trading sessions.
The brokerage expects AI to become the dominant driver of memory demand in the coming years.
According to its forecasts, AI applications will account for roughly two-thirds of total memory demand, with annual memory demand growth reaching 15% beyond 2030, compared with the historical average of about 10% over the past two decades.
The firm also argued that the memory business is becoming structurally stronger.
It said high-bandwidth memory “deserves a premium to commodity DRAM” because demand is increasingly supported by long-term AI infrastructure spending rather than traditional cyclical factors.
Looking further ahead, New Street projects Micron could generate more than $150 billion in annual free cash flow by 2030 while accumulating over $600 billion in cash, describing both figures as peak levels.
Analysts see improving industry fundamentals
Micron’s rally has also been supported by improving sentiment across the broader memory sector.
Investors have returned to memory-chip stocks following Sandisk’s optimistic long-term outlook presented at its investor day earlier this week.
Shares of South Korean memory producer SK Hynix also moved higher in trading.
Analysts expect memory pricing to remain strong throughout the year.
KeyBanc forecasts dynamic random-access memory (DRAM) prices will increase by 15% to 20% in the third quarter compared with the previous quarter, followed by another 15% increase in the fourth quarter.
For NAND flash memory, the firm expects prices to rise by 30% to 40% in the third quarter before advancing another 15% in the final quarter of the year.
Valuation debate continues despite rally
Despite Micron’s strong performance, analysts argue the stock still trades at a discount to many semiconductor peers.
According to FactSet data, Micron trades at a forward price-to-earnings ratio of about 6.3 times, though analysts note traditional valuation metrics can be misleading because memory earnings have historically been cyclical.
UBS analyst Timothy Arcuri recently reiterated a $1,625 price target, valuing the company at 11 times his projected 2029 earnings.
Arcuri said he is using 2029 earnings because they “best reflect Micron’s through-cycle earnings power under LTAs”, adding that his model assumes “a moderate memory downcycle” by then.
With analysts seeing high target prices for Micron, investors weighing an entry point can use investment apps to access research tools and execute trades at the right time.
With AI infrastructure spending continuing to accelerate and analysts forecasting sustained strength in memory pricing, investors are increasingly viewing Micron as a long-term beneficiary of the expanding AI ecosystem.
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