By Adam Clark

Micron Technology stock was falling early Friday as market gloom overshadowed its better-than-expected earnings.

That's not putting off analysts who back the growth of artificial-intelligence hardware to keep boosting the market for its memory chips.

Micron shares were down 3.0% at $99.81 in premarket trading. Initial gains after its earnings report on Thursday faded amid a wider market slump.

However, Wall Street is still confident high-bandwidth memory (HBM) -- a necessary component of the latest AI processors from the likes of Nvidia -- is set to drive Micron's growth in the longer term.

Micron said that sales of HBM chips surpassed the $1 billion milestone in its fiscal second quarter, ahead of its own estimates and up 50% sequentially. It raised its forecast for the total addressable market of HBM chips in 2025 to more than $35 billion from $20 billion previously.

"With HBM sold out through this year, and HBM requirements only looking to increase...for the foreseeable future (on the back of both strong AI demand as well as increased bit equivalency metrics), we see HBM growth as a tailwind that looks set to persist into CY'26 [calendar year 2026], " wrote Wedbush analyst Matt Bryson in a research note.

Bryson raised his target price on the stock to $130 from $125, while keeping an Outperform rating.

The question for Micron is whether growth in HBM chips can offset any cyclical weakness in DRAM -- or dynamic random-access memory -- or NAND chips in its core end markets of PCs, mobile phones, and data centers. Micron Chief Executive Sanjay Mehrotra said in a statement demand for its DRAM and NAND products is growing in data center and consumer-oriented markets.

"We see no change in the big picture story here -- Micron has established technology leadership in HBM and its ramp is siphoning wafers away from traditional PC/smartphone memory markets, meaning that DRAM should operate with more sustained supply/demand dynamics as long as AI continues to grow," wrote UBS analyst Timothy Arcuri in a research note.

Arcuri kept a Buy rating and $130 target price on the stock

Write to Adam Clark at adam.clark@barrons.com

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March 21, 2025 08:43 ET (12:43 GMT)

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