Micron Hits Record High as Bernstein Sees Memory Supercycle
Bernstein raised its Micron price target 20% to $330, citing the largest memory pricing upcycle in history. Shares surged 10% to a new all-time high.
Micron Technology started 2026 with a bang.
Shares of the memory chipmaker surged 10.5% on Friday to close at $315.42, hitting a fresh all-time high. The catalyst: Bernstein raised its price target 20% to $330 from $270, maintaining an Outperform rating and calling this the biggest memory pricing upcycle the industry has ever seen.
Trading volume hit 41.9 million shares—62% above the three-month average. Investors are betting that AI-driven demand for high-bandwidth memory will keep pushing prices higher through the year.
The Bernstein Call
Analyst Mark Li based his upgrade on data from Micron's fiscal Q1 2026 earnings report, released two weeks ago. The numbers were striking: revenue jumped 56% year-over-year to $13.6 billion, while earnings per share climbed 175% to $4.60.
But it's the forward outlook that has Li excited.
He expects DRAM prices to rise 20% to 25% sequentially in Q2, with gains continuing throughout 2026. The reason is simple: AI datacenters are consuming memory at rates that existing capacity can't match, and new supply takes time to build.
"As AI makes datacenter demand balloon but supply expansion takes time," Li wrote, Micron sits in a favorable position. The company's entire 2026 output of High Bandwidth Memory (HBM)—the premium product used in AI accelerators—is already sold out.
HBM: The Real Story
Micron's HBM business is what's driving the valuation expansion.
High Bandwidth Memory stacks DRAM chips vertically, allowing much faster data transfer rates than conventional memory. Nvidia's H100 and H200 GPUs, the workhorses of AI training, require HBM to function. No HBM, no AI training.
Micron was late to the HBM party compared to Samsung and SK Hynix. But it's catching up fast. Management guided to HBM revenue tripling in fiscal 2026, with supply shortages expected to persist into 2027.
The pricing power is real. Unlike commodity DRAM, which cycles through brutal boom-bust periods, HBM pricing has remained elevated due to constrained supply. Customers will pay premium prices when the alternative is not training their AI models at all.
Broader Chip Rally
Micron didn't rally alone.
Friday's session saw broad gains across the semiconductor space. ASML jumped 9%, Lam Research and Intel each rose more than 6%, and Marvell Technology added 5%. Nvidia gained 1%, extending its role as the market's bellwether AI name.
The rally continues a trend from 2025, when chip stocks dominated equity returns. Micron's 239% gain last year made it the second-best performer in the S&P 500 among full-year constituents.
Bank of America recently identified six chip stocks positioned for trillion-dollar surges in 2026, with memory names featuring prominently. The thesis: AI infrastructure buildout is still in early innings, and component suppliers will benefit for years.
Valuation Check
Micron now trades at roughly 7 times forward revenue and 18 times forward earnings—elevated by historical memory stock standards but modest compared to AI software names.
The valuation debate centers on cycle sustainability. Memory has always been cyclical: prices rise, capacity expands, oversupply emerges, prices crash. Bears argue this time is no different.
Bulls counter that AI demand represents a structural shift. The sheer volume of memory required for large language models, inference workloads, and edge AI deployment creates a floor under demand that didn't exist in prior cycles.
Li's call aligns with the bull case. He's modeling continued price increases precisely because supply expansion lags demand—a dynamic that should persist through at least mid-2027.
Risks to Consider
The trade isn't risk-free.
China restrictions remain a wildcard. The U.S. has limited exports of advanced chips and equipment to Chinese customers, and Micron specifically lost access to the Chinese smartphone market after Beijing blocked sales of certain products. Any escalation could further reduce the addressable market.
Competition is intensifying. SK Hynix currently leads in HBM technology, and Samsung is pouring resources into catching up. If Micron stumbles on next-generation HBM3E execution, the valuation premium could compress quickly.
And the macro backdrop matters. If AI spending slows—whether due to corporate budget constraints, model efficiency gains reducing compute needs, or a broader tech correction—memory demand could soften faster than currently modeled.
What's Priced In
At $315, Micron needs to deliver on its HBM ramp, maintain pricing power, and continue executing on datacenter penetration.
The consensus price target sits around $280, meaning analysts have room to catch up to where the stock trades. Bernstein's $330 target implies only 5% upside from Friday's close—suggesting Li sees fair value near current levels rather than a screaming buy.
For traders, the move reflects positioning for continued momentum. Micron was already one of the most heavily traded options underlyings, and Friday's surge likely triggered short covering alongside new long entries.
Looking Ahead
Earnings are the next catalyst. Micron reports fiscal Q2 results in late March, with attention on HBM revenue mix, DRAM pricing trends, and any updates to full-year guidance.
Until then, the stock trades on sentiment and broader AI enthusiasm. Friday's rally suggests that enthusiasm isn't fading—Micron is entering 2026 with the strongest fundamental setup in its history, and investors are betting the supercycle has room to run.