Piper Sandler analyst Harsh V. Kumar reiterated an Overweight rating on Micron Technology, Inc (NASDAQ:MU) with a price target of $130.

During Kumar’s AI Discovery Bus Tour last week, he engaged with Micron’s management, gaining valuable insights into their strategic direction, particularly in the high-bandwidth memory (HBM) market. Micron’s leadership in the HBM3E product sector, noted for its 30% greater power efficiency over competitors, is converting into significant revenue visibility, per the analyst. 

Also Read: Micron’s DRAM Supply Temporarily Hit by Taiwan Earthquake, But Long-Term Outlook Remains Strong

Kumar stated that the company has already sold out its HBM capacity for 2024 and most of 2025 and anticipates revenue growth from this segment in the coming years. This reflects a broader industry shift towards differentiation, with HBM designed to cater to specific compute architectures, moving away from the previously commodity-like approach in memory products, he said.

Micron’s projection that its HBM market share, in both bits and revenue, will align with its broader DRAM market share by 2025 underscores the strategic importance of HBM in its product lineup. 

The company is facing challenges in expanding HBM capacity, requiring cleanroom environments and significant capital expenditure, yet is committed to overcoming these hurdles. The analyst said that this commitment is part of Micron’s broader strategy to engage with leading customers in the data center market, who have been providing positive feedback through the qualification processes.

Looking ahead, Micron is preparing for the next generation of HBM, with HBM4 volume production slated for around 2026, underscoring the company’s commitment to innovation and its customers’ future needs, per the analyst. The adoption of HBM will likely substantially impact Micron’s gross margins, potentially returning them to peak levels seen in previous memory cycles, Kumar said. 

Kumar projected third-quarter revenue and EPS of $6.61 billion and $0.87.

Micron stock gained over 96% in the last 12 months. Investors can gain exposure to the stock via REX FANG & Innovation Equity Premium Income ETF (NASDAQ:FEPI) and Invesco Semiconductors ETF (NYSE:PSI).

Price Action: MU shares traded higher by 0.07% at $122.5 on the last check Monday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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