Citigroup sharply raised Micron’s target price to $840: HBM prices will rise again next year, and EPS will surpass $100!

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Driven by the surge in AI computing demand and continuously limited supply, the memory industry is entering a rare super-boom cycle and a phase of profit revaluation.

On May 18, Citigroup analyst Atif Malik released a report, significantly raising Micron Technology’s target price from $425 to $840—a near doubling—and maintaining a “Buy” rating. The core rationale for this upgrade is that the DRAM super-cycle is rapidly entering a stage of price elasticity release.

The report points out that high-bandwidth memory (HBM) supply remains tight, and pricing is expected to have upside potential through 2027. Since producing HBM consumes three to four times the wafer capacity of regular DRAM, the continued expansion of HBM production will crowd out the supply of regular DRAM, thereby pushing up its price. In terms of the specific price increase rhythm, Samsung will be the first to raise prices in Q1 2026, with Micron planning to follow in Q2 2026 with an increase of about 40%.

Based on the upward pricing trend, Citigroup simultaneously raised its earnings forecasts for Micron: Core earnings per share (EPS) for FY2026 increased by about 10% to $58.46, and for FY2027 further raised to $104.56. The new target price of $840 is anchored at about 8 times Micron’s expected EPS for 2027.

DRAM price surge accelerates, Micron follows Samsung’s lead

The current DRAM price uptrend is now fully underway. Samsung will take the lead by raising prices 100% in Q1 2026, while Micron plans an increase of about 40% in Q2 2026.

This round of price increases is mainly driven by a supply-demand gap for standard commercial DRAM (non-HBM). Applied Materials’ silicon system sales outlook shows that DRAM bit supply growth by the end of 2026 is expected to be only about 30%, which still cannot meet the expanding AI data center demand in 2027. Additional new wafer capacity investment will be needed in the future.

Citigroup expects average DRAM prices to rise about 200% year-on-year in 2026, and NAND prices up about 186% year-on-year, further confirming that the memory industry is currently in a historically strong pricing cycle.

HBM supply remains tight, with elevated price-increase expectations for 2027

HBM pricing prospects are one of the core logics for Micron’s higher valuation.

Producing HBM consumes roughly three to four times the wafer capacity of regular DRAM. The current profit gap between HBM and standard memory is not yet enough to drive memory manufacturers to massively convert or add capacity. As a result, manufacturers generally remain disciplined on the supply side, causing HBM supply to stay tight.

It is expected that with constrained supply, HBM pricing will still have upward potential in 2027. At the same time, memory manufacturers will continue practicing disciplined supply management to avoid AI data centers cutting back HBM purchases due to excessive costs.

However, demand-side risks shouldn’t be ignored. Cisco, under price pressure, has already cut DRAM usage by 50% across more than 20 product lines, including wireless products. This case shows that excessively high memory prices may suppress some end-user demand, so memory manufacturers need to strike a balance between the pace of price increases and maintaining demand.

Target price significantly raised, valuation anchored to historical up-cycle

Citigroup raised Micron’s target price from $425 to $840, increasing the valuation multiple from 5x to 8x 2027 expected EPS, citing the unprecedented pricing environment and strong AI demand. This valuation level is consistent with Micron’s historic trading ranges during DRAM up-cycles.

The report projects Micron's core EPS at $104.56 for FY2027, declining to $80.49 in FY2028, reflecting expectations for a cyclical correction. FY2027 free cash flow is expected to reach $87.931 billion, with a free cash flow yield around 10.6%.

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