Trump and UBS Group AG are bullish together, does Micron Technology (MU.US) still have double the potential after reaching a market value of over 1 trillion?

After soaring 684% in the past year, analysts believe that Micron Technology, Inc. (MU.US) is still a stock worth investing in for Beijing Zhidemai Technology in the short term. With the boost from favorable factors in artificial intelligence and the recovery of the memory cycle, its stock still has great potential for further growth. The stock price surge: stunning financial reports, Trump's endorsement, and UBS Group AG's aggressive long position On March 19, Micron Technology, Inc. delivered a report for the second quarter of the 2026 fiscal year that surpassed management's guidance by a large margin reporting a revenue of $23.86 billion, a 196% year-over-year increase, and the highest organic growth rate in the company's history. The non-GAAP earnings per share increased by 155% from the previous quarter and by 682% year-over-year to $12.20, surpassing analysts' expectations of $9.16. CEO Sanjay Mehrotra's remarks during the earnings call were confident: "Micron had an outstanding second quarter, setting record revenue, gross margin, earnings per share, and free cash flow. Revenue nearly tripled compared to the same period last year, and revenue from DRAM, NAND, HBM, and all business segments reached new highs. The revenue guidance for the third quarter is already higher than the full-year revenue for any year before fiscal year 2024." The third quarter revenue guidance was a bombshell in itself: with a midpoint revenue of $33.5 billion (a +/- $7.5 billion range), significantly higher than analysts' expectations of around $21.15 billion before the financial report. If achieved, this would represent a 260% year-over-year increase. The non-GAAP gross margin is expected to expand by over 43 percentage points to around 81%, and the earnings per share guidance is $19.15, corresponding to around a 1040% increase a profit margin height unseen in the storage industry. Market madness reevaluates Since then, the situation has evolved in a more frenzied manner. On May 26, 2026, driven by UBS Group AG's triple target price increase, President Trump's public endorsement, and the strong momentum of the overall storage sector, Micron Technology, Inc. surged 19.29% in a single day, closing at $895.88 per share, with a market value exceeding $1 trillion. It became the 13th company globally to enter the trillion-dollar club, following NVIDIA Corporation, Apple Inc., Microsoft Corporation, Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR, and Broadcom Inc., and the only pure storage enterprise among them. Year to date, Micron Technology, Inc. has accumulated a 225% increase, significantly outperforming the 82% increase in the Philadelphia Semiconductor Index; the stock has risen by 75% since May, potentially achieving its best monthly performance since 1987. The next day, May 27, the stock continued to rise, closing at $928.41, with a total market value of about $1.05 trillion and a TTM P/E ratio of 43.81 times. The core catalyst driving this surge comes from UBS Group AG analyst Timothy Arcuri. Ranked second among the 12,266 analysts tracked by TipRanks, with a historical success rate of 81% and an average return rate of 56.6%, this five-star analyst raised Micron's 12-month target price from $535 to $1,625 in one go, a 204% increase, setting a new record for the highest target price on Wall Street. However, the climax of the story does not end here. Worth noting is Arcuri's statement: "We believe the market will start to give the stock a more 'normal' valuation multiple, as more details emerge on how AI is driving structural changes in the entire storage domain. Micron will continue to undergo valuation revaluation." He believes that the storage industry is undergoing a fundamental transformation long-term supply agreements have been implemented across the industry, locking up to 30% of DDR shipments at slightly lower prices than current levels. This means that storage manufacturers are transitioning from commodity suppliers chasing short-term fluctuations to quasi-infrastructure enterprises with multi-year revenue predictability. Arcuri predicts that Micron's earnings per share for calendar years 2027 to 2029 will be $155, $167, and $117, respectively, and earnings per share will remain above $100 until 2029, generating over $400 billion in free cash flow over that period. Meanwhile, Micron's CFO Mark Murphy revealed during the earnings call that the company's capital expenditure for the 2026 fiscal year will exceed $25 billion, with an additional $10 billion expected in 2027. The disclosed expansion plan covers locations in Idaho, New York, Virginia, Hiroshima, Singapore, Taiwan, and India a capacity arms race spanning multiple continents and extending until 2030. Hot demand for AI chips, HBM driving a shift in valuation logic The fundamental basis supporting this paradigm shift in valuation is that High Bandwidth Memory (HBM) is fundamentally reshaping the economics of storage chips. Traditional DRAM is a two-dimensional general-purpose storage chip that can easily replace competitors' products, following the textbook-like law of pricing for commodities: strong demand price increase capacity expansion oversupply price collapse. Every investor who experienced the storage crash in 2018 and the deep downturn in 2023 holds deep respect for this cycle. HBM disrupts all of this. It is a complex three-dimensional chip manufacturers vertically stack DRAM die into 8, 12, or 16 layers, rather than just cutting them from a single plane die. The three-dimensional manufacturing process requires the use of thinner dies, as stacked chips will be too tall, heavy, and difficult to cool if not made from thinner dies. However, manufacturing thin dies is an extremely precise process with a higher risk of failure than traditional thick two-dimensional dies thin dies are prone to cracking under vibration or thermal shock, and a faulty layer can ruin the entire three-dimensional chip. In addition, manufacturers must drill through and pass through silicon vias (TSVs) this tiny wire connection process is prone to faults. All of these factors combined result in a much lower yield for three-dimensional HBM chips compared to traditional two-dimensional DRAM. Because of this, HBM is not something that can be easily taken off the shelf it is deeply integrated with AI chip architectures. For AI processors to function properly, they need to receive massive data throughput in a short period, and HBM is specifically designed for this purpose. The biggest HBM customers are often the biggest AI chip suppliers. They synchronize the specifications and performance parameters of HBM with the chip architecture during design and verification. Once a supplier is selected for HBM, changing suppliers throughout the chip generations almost implies redesigning the whole AI chip. In other words, the competitive barrier for HBM lies not in offering the lowest price once, but in becoming an irreplaceable element in the customer's AI chip product roadmap. In March 2026, Micron announced at NVIDIA Corporation's GTC conference that it had started shipping HBM4 36GB 12-layer stacked products for the next-generation NVIDIA Corporation Vera Rubin platform. This milestone of winning the design, sales, and shipment in sync officially places Micron as a core supplier in the AI infrastructure landscape. Subsequently, Manish Bhatia, Micron's Global Operations Deputy, revealed at the Morgan Stanley investor conference in May that the HBM4 ramp-up rate had reached approximately twice that of last year's 12-layer HBM3E products, with a faster yield improvement. Additionally, the development of HBM4E Micron's next-generation HBM product is also progressing at full speed, with mass production expected in the 2027 calendar year. This product will adopt Micron's leading 1-gamma DRAM technology node, planned to bring another leap in performance, support the next generation of AI computing platforms across the industry. 1-gamma will lower the cost per bit, increase the storage bit count manufactured on a single physical die, and is expected to have better power efficiency and higher yield than the previous generation 1-beta all of these attributes can a greater market share. With HBM4E's average selling price higher than HBM4, when it achieves scale production in 2027, it will help expand profit margins once again. SCA: Long-term contracts rewriting the storage business model For investors, the demand driven by HBM is just the first line of defense. The deeper transformation is reflected in the evolution of the business model the terms of long-term supply agreements are fundamentally reshaping. Micron CEO Mehrotra revealed during the earnings call that the company has broken away from the one-year-based long-term supply agreements (LTA) and signed its first five-year strategic customer agreement (SCA). Compared to the LTAs of the past that were annual renewals indexed to spot market pricing, the SCA represents a fundamental evolution of the storage industry's business model: multi-year fixed shipment commitments (not yearly renewal), stable pricing frameworks over multiple years decoupled from spot market indices, guaranteed supply allocation mechanisms for scarce products like HBM, and strategic cooperation terms to gain deep visibility into customer roadmaps for Micron. The more demand locked up by SCAs, the stronger the pricing power and the more stable the profit margin bottom line. When the industry downturn cycle inevitably arrives, this "enhanced" long-term agreement will provide a more solid safety net compared to historical cycles. Timothy Arcuri of UBS Group AG confirmed through supply chain analysis that up to 30% of DDR shipments across the industry will be locked up at prices slightly below current levels. NAND flash memory is also worth mentioning. Mehrotra pointed out during the earnings call: "We have now achieved mass production of high-performance data center SSDs based on G9 NAND and PCIe Gen6. The adoption of 122TB high-capacity SSDs is gaining strong traction in the market. The sequential read throughput per watt is 16 times that of an equivalent capacity HDD configuration." Ultra-large data centers are transitioning from HDD to QLC SSDs for AI storage architecture the core driver of this transformation is that HDDs are approaching the speed limit for feeding data to AI chips, while SSDs can accommodate significantly more data in a smaller space with significantly higher power efficiency. If Micron's G9 QLC strategy succeeds, the company will have a key advantage in the large-scale SSD transformation in the coming years. The mega capital expenditure and the delicate balance of inventory The material basis supporting the SCA logic is that the storage industry as a whole and Micron itself lack sufficient clean room space and other physical infrastructure to meet the escalating storage demands of ultra-large-scale AI infrastructure providers. Micron's capital expenditure for the 2025 fiscal year was $15.86 billion. The 2026 fiscal year budget has been significantly raised to over $25 billion, with an additional $10 billion expected in 2027. This funding is being invested in greenfield capacity construction projects worldwide: a $9.5 billion greenfield production line in Singapore; two wafer fabs in Idaho ID1 is expected to start producing the first DRAM wafers in the second half of the 2027 calendar year, and ID2 is expected to start wafer production at the end of 2028; a larger comprehensive facility in New York groundbreaking took place ahead of schedule in January 2026, with production expected to start in 2030. In addition, Micron also acquired a wafer fab in Toulong, Miaoli, Taiwan from Powerchip for $1.8 billion, planning to convert it to a cutting-edge DRAM production line and planning a second wafer fab at the site. The market's expectation of over $10 billion in additional capital expenditure is interpreted as a positive signal for forward-looking drivers such as demand, pricing power, and multi-year revenue visibility a typical bullish signal. It implies that Micron sees the multi-year storage procurement commitments from NVIDIA Corporation, AMD, and ultra-large cloud providers, and the company's recent signing of the first five-year SCA is evidence of the multi-year demand. On the other side of capital expenditure, investors need to consider a key risk indicator: capital intensity. In the second quarter of the 2026 fiscal year, Micron's capital intensity (capital expenditure divided by revenue) was approximately 26.8% (about $6.387 billion $23.86 billion). During the 2021-2022 DRAM/NAND expansion cycle, this ratio was as high as 30% to 50% (for example, around 47% in the first quarter of the 2021 fiscal year). The current level of 26.8% is far below the capital intensity peak of the previous boom period and in this cycle, Micron also needs to spend heavily on HBM products, which naturally require higher capital intensity. Achieving stronger revenue growth with lower capital intensity than the previous boom cycle is strong evidence of Micron's efficient supply expansion. Inventory days provide another important monitoring dimension. At the end of the second quarter, the inventory was $8.3 billion, an increase of only $62 million from the previous quarter, with days of inventory (DOI) at 123 days. The management described DRAM inventory days as "particularly tight" and below 120 days. A DOI above 150 to 160 days typically indicates oversupply risk, while below 120 days indicates demand far exceeding supply. As long as management continues to use the term "tight" to describe inventory and the DOI remains below 150 days, the market is unlikely to be overly alarmed. Valuation challenges where is the premium boundary for cyclicality? Micron Technology, Inc. is one of the most challenging stocks to value in history. The cyclical and commodity nature of the storage industry renders almost all traditional valuation methods inherently flawed. Each method provided below only offers an incomplete perspective and needs to be used in conjunction. Method one: price-to-sales ratio (P/S). Micron's TTM P/S ratio is approximately 13.86 times, significantly higher than its three, five, seven, and ten-year median. Typically, a stock trading above the median is a sign of overvaluation but this may not be reliable for Micron. During downturn cycles, profit declines much faster than sales, and investors sell off the stock much faster than profit and sales decline, leading to a rapid compression of the P/S ratio and lowering of the median. A stock's TTM P/S ratio compared to the median formed by its low years often appears "overpriced" during an upswing cycle. Within cross-industry comparables, Micron's forward P/S ratio for 2027 is about 4.56 times, lower than the hardware industry median; the forward PEG is about 0.08 times, also showing undervaluation especially considering that Micron's gross margin, operating margin, and ROIC are all above the median. Method two: price-to-earnings ratio (P/E) and PEG. Micron's TTM GAAP P/E ratio is about 34.43 times, around 2% lower than the industry median, which is close to the fair value range. The forward PEG for 2027 is about 0.089 times a PEG lower than 1.0 times traditionally indicates undervaluation, but the market is unlikely to assign Micron a PEG ratio of 1.0 times for a cyclical stock like Micron. Assuming Micron can trade at a PEG ratio of 0.50 times, the target price would be around $3,917, significantly up from the closing price of $928 on May 27, with over 300% upside potential a cautionary note: PEG may not be a reliable pricing tool in this case. Method three: enterprise value multiple (EV/EBITDA) the cyclical stock valuation method that Wall Street semiconductor analysts rely on the most. Micron's current forward EV/EBITDA is around 8.77 times, about 37% lower than the industry median of 13.87 times, implying that the market may not fully reflect Micron's structural premium from recovery at the trough of the storage cycle. The forward EV/EBIT is around 10.11 times, about 46% discounted from the industry median of 18.87 times. Based on a forecast of around $5.4 billion in 2027 calendar year EBITDA, in pessimistic (6 times), base (7 times), optimistic (8 times), and extremely optimistic scenarios (13.87 times, i.e., the industry median), the implied stock prices show significant gradients, indicating that the assumptions based on the current price are extremely aggressive. Also worth noting is analysts' average target price of $652.98 although discounted from Micron's trillion-dollar market cap price, they collectively maintain a "strong buy" rating. Analysts do not issue buy/sell recommendations solely based on target prices as long as forward-looking indicators such as capital intensity, ROIC, inventory days, HBM and DRAM supply-demand balance remain positive and gross margins continue to expand, they are likely to continue maintaining a buy rating. A sell signal will only appear when these indicators systematically deteriorate. Another important insight to remember is that analysts' target prices and the calculations in this article based on various scenarios only look one year ahead. If the storage industry and Micron continue to surge for the next two to three years, the stock may still have considerable upside potential. In conclusion, while the optimistic sentiment around AI in the storage industry is growing, the supply-demand dynamics have always been cyclical, and Micron has always been notoriously difficult to value. The stock is high risk. Many factors could disrupt the current situation, including deteriorating macroeconomic conditions, unfavorable supply-demand imbalances in 2027-2028, delays in HBM certification, temporary slowdowns in ultra-large customer AI infrastructure construction, and excessive capacity expansion or price competition from competitors like Samsung/SK Hynix. The pace of change in the storage industry is measured in days even the forward-looking signals listed in this article may not provide sufficient sell warnings before a downward risk in stock price. Therefore, conservative and value investors should stay away from the stock. However, for growth investors seeking strong short-term upside potential investors looking to capture price uptrends in the next 12 months Micron Technology, Inc. may be an excellent choice. The company's ROIC, gross margin, inventory days, adjusted free cash flow, HBM demand, and DRAM/NAND supply-demand ratio are all moving in the right direction. As long as the company or market fundamentals do not deteriorate before the stock price does, analysts will continue to maintain a "buy" rating but this positioning is only suitable for growth investors with a high risk tolerance.