Cantor Fitzgerald Reiterates Overweight Rating on Micron (March 19)
Cantor Fitzgerald analyst C.J.
Muse reiterated an Overweight rating and $700.00 price target on Micron Technology (NASDAQ: MU).
“Another quarter, another blowout! The company guided May Q EPS of $19.15 at the midpoint vs. consensus of $12.03 and buyside expectations of $15-17.
The spectacular upside is all about pricing, across both DRAM and NAND (enabling 81% GM guide). Yes, indeed, it is ok to blush.
The story is all about AI, which is now driving for the first time 50% of total DRAM bits, and a very tight NAND environment, helped by limited supply additions as well as KVCache.
And, very importantly, you could argue we are just getting started. DRAM and NAND remain constrained, and our work suggests S/D will only get worse in CY27.
To this end, Micron raised its FY26 Capex to $25B from $20B, but we would note that this is mostly on clean room/ construction with equipment spend largely focused on HBM AP and equipment upgrades to support improved efficiency (i.e., greater bit output).
Finally, Micron highlighted its first multi-year SCA agreement (with others in the queue) but would not provide much help on the terms of these agreements (I.e. fixed or variable pricing, guaranteed delivery/acceptance, etc.).
Thus, a good start, but it doesn’t provide the assurances investors are looking for to better understand market dynamics when supply/demand is more balanced.
As for other potential concerns, Micron is now moving to a sustainability on GM’s as well as around overall demand (ala NVIDIA) following the very strong guide – implied incremental May GM’s of 97%.
As for our thoughts, tight supply still supports robust pricing throughout CY26 and CY7, enabling sustained earnings growth in the quarters ahead.
Put it all together and with EPS stretch goal now approaching $100 into the CY27 timeframe our call remains the same – stay long and strong Memory and Micron.
We raise our price target to $700 or 7x our new stretch EPS goal. Considering still considerable upside, Micron remains a TOP PICK. As for laterals, clearly positive for DRAM and NAND players.
Comment on greater EUV adoption a positive for ASML (something we highlighted a few weeks back).
On the other hand, suggestion of supply constraints driving PC/Smartphone units down low double digits a negative for more consumerfocused chip players.”
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