By Adam Clark
Micron Technology and its memory-chip peers have suffered a small dent in the past week, after racking up huge gains in recent months. That's a chance to get in on the memory surge, according to UBS analyst Nicolas Gaudois.
Micron shares have fallen 14% in the past five trading sessions, although the stock was up 3.3% to $1,007.26 in Monday's premarket. There was no clear reason for the selloff beyond nervousness around the wider technology sector. Micron has become a volatile stock with a nearly 700% gain in the past 12 months
However, Barron's has previously argued it could double from its current levels as booming memory demand driven by artificial-intelligence hardware moves it beyond its normal boom-and-bust cycle.
UBS analyst Gaudois is broadly in agreement, with a price target of $1,625 on the stock. He argues the pullback is "likely temporary."
"Fundamentals remain strong, with the memory industry set to generate close to $1.2 trillion of FCF [free cash flow] in 2027E. We believe this will ultimately lead to a step-up in returns to shareholders," Gaudois wrote in a research note.
Soaring memory chip prices are powering those returns. UBS now estimates that prices for double data rate (DDR) memory are set to rise 32% in the third quarter of this year from the previous quarter, with a further 18% rise in the fourth quarter.
"We continue to forecast the dynamic random access memory industry to be undersupplied until at least 2Q28 [the second quarter of 2028]. The gap between bit demand growth in 2027 (+36.2% YoY) and supply (+19.3%) is too wide to close by then," Gaudois wrote.
Write to Adam Clark at adam.clark@barrons.com
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