Micron (MU) soars more than 6% after UBS raises price target to $1,625

Shares of Micron Technology (MU) rallied Tuesday, advancing more than 6.3% in premarket trading to near $798 per share.

The main catalyst was investment bank UBS, which surprised the market by aggressively raising its price target for the company from $535 to $1,625 per share, representing an upside potential of more than 100%.

UBS bets on structural change in Micron's business

Analyst Timothy Arcuri pointed out that Micron is benefiting from a major transformation in the memory industry. More and more customers, especially large cloud providers, are signing long-term supply contracts of three to five years.

According to UBS, as much as 30% of global DDR memory volume could fall under such agreements in the coming years. These contracts offer greater revenue visibility and significantly reduce traditional industry volatility, which is highly valued by investors.

Valuation similar to Nvidia

Arcuri justified the ambitious price target by valuing Micron at about 15 times its expected next 12-month earnings. The analyst noted that he sees no reason for Micron to trade at a much lower multiple than Nvidia, given its heavy exposure to AI growth.

Mizuho also remains bullish, reaffirming its Outperform rating with an $800 price target and highlighting strong demand for AI server memory.

Investor outlook

The market is celebrating the confidence of Wall Street that demand for HBM and DDR5 memory for AI servers will remain very robust in the coming years. After years of volatility, Micron appears to be entering a new, more stable and profitable growth cycle.

With this strong rebound and the backing of UBS, Micron Technology is consolidating its position as one of the most attractive stocks in the technology sector for investors betting on the development of Artificial Intelligence.