UBS triples Micron price target as AI demand reshapes semiconductor valuation
Micron Technology shares climbed 14.2% in early trading on Tuesday, bringing the company’s market capitalisation within striking distance of the $1 trillion mark.
Shares of Micron Technology rose approximately 14.2% in early trading on Tuesday following a significant revision to its price target by brokerage UBS. The investment bank raised its target more than threefold to $1,625 from $535, citing stronger artificial intelligence demand and the emergence of long-term supply deals as primary catalysts. The move brings the semiconductor manufacturer closer to a $1 trillion market capitalisation, with the company’s valuation standing at $846.93 billion as of the previous Friday close.
The revised target represents the highest estimate among the 46 brokerages covering the stock. According to UBS, the new price implies a potential valuation of close to $1.8 trillion for the company over the next twelve months. This upward revision reflects a broader shift in the semiconductor sector, where hyperscalers are increasingly willing to trade pricing flexibility for long-term supply assurance, a change that helps stabilise contracts and reduce historical pricing swings.
UBS highlighted that these long-term agreements are expected to cover a growing portion of DRAM supply, providing greater demand visibility and mitigating the volatility that has historically characterised the industry. The brokerage noted that such arrangements could stabilise Micron’s earnings profile, allowing the company to command a higher valuation multiple as investor confidence in longer-term earnings durability grows.
In its analysis, UBS stated there was no reason Micron should trade at a significantly different price-to-earnings multiple compared to Nvidia, provided long-term agreements and AI-driven demand continue to reshape the company’s earnings visibility. The brokerage expects Micron to move closer to other semiconductor peers as the market adjusts to the new reality of contracted supply and sustained artificial intelligence hardware requirements.
As of the previous Friday close, Micron was trading at 8.42 times expected earnings over the next 12 months, compared to 21.1 for the S&P 500 index and 24.66 for the Nasdaq 100. The stock had closed at $751 on Friday, before surging in early trading on Tuesday to reflect the updated outlook.
