The sustainability of the storage chip super cycle becomes clear. RBC raises the price target for Micron Technology (MU.US) to $525.

Micron Technology (MU.US) Target Price Raised to $525 by RBC Capital Markets

RBC Capital Markets has issued a research report raising the target price for Micron Technology (MU.US) from $425 to $525, while maintaining an “Outperform” rating, citing optimism about the super cycle in storage chips.

Led by analyst Srini Pajjuri, the team stated: “Given the continued strength in storage chip prices, we are significantly raising our earnings forecasts. The key question now is the duration of this cycle — our baseline assumption is that the price rally will last through 2026. Although DDR prices may eventually decline, the pricing advantage of HBM and increased single-chip capacity (Rubin Ultra HBM capacity increased by approximately 3.5 times) are expected to provide ongoing support, extending the rally into 2027.”

The analysts further noted: “It is worth noting that, in this super cycle, structural drivers—including strong demand from data centers for HBM, DDR, and enterprise SSDs—are playing an increasingly critical role. As the cycle’s sustainability becomes clearer, we see further room for valuation multiples to expand.”

The team believes that strong demand from AI and data centers could extend this upward cycle into 2027. Currently, data centers account for about half of the DRAM industry revenue, and the robust demand for HBM and DDR memory driven by AI is expected to continue through 2027.

Pajjuri’s team added that recent statements from Micron’s management indicate that HBM capacity will be sold out by 2026, and the new generation HBM4 memory is on track for mass production and delivery in the first quarter of 2026. They expect HBM3E prices to soften modestly in 2026, while HBM4 prices are projected to be 30% to 50% higher than HBM3E.

Looking ahead, the team forecasts: “With contract renegotiations in 2027, HBM prices are likely to rise further. Additionally, each generation of GPU/XPU is seeing significant increases in HBM capacity, a trend expected to continue through 2027 and beyond (for example, Rubin Ultra’s HBM4e capacity reaches 1TB, compared to 288GB for the Rubin platform). The deployment of DDR memory in AI servers is also increasing substantially, driven by rising inference workloads and expanded context windows (Vera Rubin NVL72 platform equipped with 54TB of LPDDR5 memory, three times the capacity of the GB300 rack system).”

The analysts believe that even if demand in the PC and smartphone markets remains weak, growth in AI and data center needs will offset this impact. In the NAND flash memory sector, driven by retrieval-augmented generation (RAG) and intelligent AI applications, market demand is expected to outpace supply through 2026.

Micron Technology is scheduled to release its Q2 2025 financial results on March 18, Eastern Time.