Micron Earnings: Valuation Up 14% to $80 Behind Strong Recovery and AI, but Shares Still Look Pricey

We raise our fair value estimate for shares of no-moat Micron Technology to $80, from $70, as we raise our short-term forecasts after the firm reported strong February-quarter results and an outlook for the May quarter above our model. We believe Micron has more strength to come in the next two years as it benefits from rebounding prices in both DRAM and NAND memory chips after steep downturns in 2023. We expect Micron to also see upside to the underlying DRAM market rebound as it develops rising penetration in high-bandwidth memory, or HBM, which is an input into graphics processing units, or GPUs, from the likes of Nvidia that run artificial intelligence models. Still, we believe Micron will continue to be prone to memory market cyclicality (as seen in 2023) over the long term, and we forecast more tepid growth after fiscal 2025. We continue to see shares as overvalued and recommend investors seek a better entry point.