Bank of America analysts maintain a bullish outlook on Micron Technology (NASDAQ:MU), citing significant opportunities in AI and a structurally improved industry landscape.
Following investor meetings in Boston and New York with Micron CFO Mark Murphy, CVP Satya Kumar, and IR Samir Patodia, Bank of America reiterates its Buy rating and a price target of $170 for Micron.
According to the bank, key takeaways from the meetings emphasize strong pricing, supply discipline, and mix improvement towards AI computing and enterprise storage products.
Analysts explain that Micron aims to expand its high bandwidth memory (HBM) market share to 20-25% in a calendar year 2025 TAM that could exceed $20 billion. This marks a substantial increase from less than 10% of a $14 billion TAM in 2024. In addition, Bank of America says the company is sold out at determined pricing through the end of next year, indicating robust demand and clear visibility.
"Edge AI - phones and PCs - just getting started and could become an incremental growth driver over the next few years," according to Bank of America analysts.
They highlight Micron’s industry-leading technology, boasting a 30% performance advantage over peers in HBM, and a strong balance sheet as key differentiators. The bank says the complexity of AI memory, requiring three times the number of wafers for the same bit output as traditional DRAM, further solidifies Micron's market position.
Micron’s focus on HBM is also expected to tighten traditional capacity, leading to better pricing across DRAM. Bank of America highlights that the company also anticipates gross margins to improve consistently, driven by a mix shift to higher-margin products such as HBM, high-capacity DIMM, LPDDR, and enterprise SSDs.
Bank of America notes Micron is preparing for conservative scenarios, assuming competitors like Samsung may improve their HBM yield. However, any delays in competitors' qualifications could provide upside for Micron.
In conclusion, Bank of America remains positive on Micron, highlighting its broad exposure to AI and disciplined supply management as factors that could drive substantial growth and improved financial performance.