Micron Technology (MU, Financials), a semiconductor company that makes memory and storage chips used in data centers, computers, phones and AI systems, remains a Buy at Bank of America as the firm sees strong AI infrastructure spending keeping the chip cycle intact.
BofA expects global cloud and AI infrastructure capital spending to approach $1.5 trillion by 2027, up 40% to 50% from a year earlier.
The firm said the recent pullback in semiconductor stocks looks more like a healthy reset than a sign of weaker AI demand.
For Micron, the key point is memory. BofA said memory now accounts for about 35% to 40% of cloud AI spending, much higher than historical levels.
The firm believes investors are still underestimating how important memory has become to AI infrastructure. It also expects longer-term supply agreements and more stable pricing to support Micron's valuation over time.
BofA kept Micron as a top pick with a $1,550 price target.
The next test is whether hyperscalers keep spending aggressively on AI infrastructure as investors look for clearer returns from the buildout.