UBS raises Micron target price to US$535 and reiterates Buy

Overview

This report is UBS's company research on Micron Technology Inc. The core view is that, although market sentiment weakened sharply after Micron's gross margin guidance, UBS still believes the memory industry is in a super-cycle that may exceed traditional analytical frameworks. Industry checks show that DRAM, NAND, and HBM pricing continues to strengthen, and hyperscalers and OEMs are increasingly willing to enter into long-term agreements, which helps memory vendors trade some near-term upside for longer-term visibility on volume, pricing, and profits.

Core views

UBS's bullish view on Micron is based mainly on four points: first, the assumed increase in DDR and NAND contract prices in CQ1:26 and CQ2:26 remains strong; second, HBM demand is growing rapidly, with C2026 end demand projected at 31.2B Gb, up about 80% year over year, and C2027 projected at 54.0B Gb, up about 73% year over year; third, the HBM pricing assumption has been raised to 35% year-over-year growth; and fourth, long-term industry agreements and strategic customer contracts may make earnings, margins, and ROE more stable through the cycle. UBS therefore raised its target price and expects Micron's C2027 and C2028 EPS to be materially above market consensus.

Analysis framework

The report combines industry checks, updated pricing assumptions, HBM supply-demand forecasts, capital expenditure assumptions, and segment-level valuation. Valuation uses an SOTP approach, valuing Core DRAM+NAND and HBM separately: Core DRAM+NAND is valued at about 3x P/S, corresponding to C27E revenue of US$187.7B; HBM is valued at about 6x P/S, corresponding to C27E revenue of US$27.9B.

Methodology notes

• Valuation methodsSOTP

  sum-of-the-parts valuation

  UBS values Micron's Core DRAM+NAND and HBM businesses separately using revenue multiples and then adds them together to derive the US$535 target price.

• Valuation methodsP/S multiple

  price-to-sales valuation

  The report uses about 3x P/S for Core DRAM+NAND and about 6x P/S for HBM, with the multiples unchanged.

• Industry researchIndustry checks

  supply-chain checks

  Based on industry checks, UBS concludes that DRAM, NAND, and HBM pricing continues to improve and that long-term agreement negotiations have become more active.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• MICRON TECHNOLOGY INC / MU.US

  research target

  Strengths

  Benefits from stronger DRAM, NAND, and HBM pricing, while long-term customer agreements improve revenue and profit visibility; UBS forecasts EPS materially above market.

  Weaknesses

  The memory industry is highly cyclical, and both share price and earnings are very sensitive to ASPs, supply-demand conditions, and the macro cycle.

  Comparison

  UBS forecasts C2027 EPS of about US$135, above the market's roughly US$103; C2028 EPS of about US$120, above the market's roughly US$98.

  Risks

  If ASPs fall more than expected, demand is disrupted by the macro environment, technology migration is slower than expected, or supply additions change pace, the target price and share price could come under pressure.

• Core DRAM+NAND

  core business segment

  Strengths

  Assumptions for DDR and NAND contract prices have been raised substantially, and the DRAM shortage could last through C2028.

  Weaknesses

  NAND suppliers have uneven incentives to enter into long-term agreements, and some may prefer to preserve flexibility in capacity allocation.

  Comparison

  UBS uses about 3x P/S for this business, implying roughly US$405 of valuation contribution.

  Risks

  The timing of price peaks, YMTC capacity allocation, supply expansion, and demand volatility may all affect the earnings path.

• HBM

  high-growth business segment

  Strengths

  AI-related demand is strong; UBS raised its HBM pricing assumption to 35% year-over-year growth and believes manufacturers want to rebuild the HBM premium in C2027.

  Weaknesses

  HBM shipment assumptions depend on competitors' capacity allocation, and industry supply as well as customer negotiation terms remain uncertain.

  Comparison

  UBS uses about 6x P/S for HBM, implying roughly US$132 of valuation contribution.

  Risks

  If AI demand, customer long-term contracts, capacity allocation, or price premiums fall short of expectations, the valuation contribution from HBM could decline.

Key data

• 12-month target priceUS$535.00Previously US$510.00.
• Current priceUS$370.36As of 2026-04-07.
• RatingBuyUBS maintained its Buy rating.
• C2027 EPS forecastabout US$135Market expectation is about US$103.
• C2028 EPS forecastabout US$120Market expectation is about US$98.
• CQ1:26 DDR contract priceabout +95% Q/QPrior assumption was about +72% Q/Q.
• CQ1:26 NAND priceabout +80% Q/QPrior assumption was about +65%.
• CQ2:26 DDR contract priceabout +37% Q/QPrior assumption was about +40% Q/Q.
• CQ2:26 NAND priceabout +40% Q/QPrior assumption was about +30%.
• C2027 HBM revenue valuation baseUS$27.9BUsed for the HBM business at about 6x P/S.
• C2027 Core DRAM+NAND revenue valuation baseUS$187.7BUsed for the Core DRAM+NAND business at about 3x P/S.

Impact & implications

If UBS's view proves correct, Micron's investment case will shift from a traditional memory-cycle stock to a cyclical beneficiary with higher earnings visibility and stronger cash-generation potential. Long-term agreements, HBM premium rebuilding, and a prolonged DRAM shortage will support more stable margins and ROE, which also explains why UBS raised its target price even as market sentiment weakened.

Risks

• The memory industry is highly volatile, and changes in global GDP and macro demand could lead to demand destruction.
• If ASP declines are worse than UBS expects, Micron's share price could face a larger downside.
• DRAM and NAND technology scaling and migration are complex; if migration is slower than expected, earnings and valuation could come under pressure.
• If the timing of new supply is faster than expected, it could weaken ASP gains and the durability of the cycle.
• If growth in AI, server, and automotive memory content deviates from expectations, the demand and pricing path could change.

What to watch

• Actual DRAM and NAND contract price increases after CQ2:26.
• Progress on HBM long-term contract negotiations, price premiums, and C2027 pricing rebuild.
• The status of long-term agreements or strategic customer agreements with hyperscalers and OEMs.
• Changes in the allocation of YMTC's new capacity between DRAM and NAND.
• C2026/C2027 capital expenditures, government incentives, and cash generation.
• Whether Micron's actual EPS continues to exceed market consensus.