Stifel Sees 44% Upside for Micron on Persistent DRAM Shortage
Stifel projects Micron gross margins near 87% this quarter, citing a structural DRAM supply deficit that outpaces 2027 demand growth.
Key points
- Stifel projects Micron gross margins of 87% this quarter and 88.2% next, driven by strong pricing.
- Analyst Brian Chin forecasts fiscal Q4 revenue of $50.78 billion and adjusted EPS of $32.
- DRAM supply growth may only reach 15-20% in 2027, falling far short of the 40% needed to meet demand.
Micron Technology enters its fiscal fourth-quarter reporting period with shares already up 266% year-to-date. Stifel analyst Brian Chin maintains a Buy rating and a $1,500 price target, suggesting another 44% gain from recent levels. He argues that the market underestimates the duration of tight DRAM supply and rising contract prices, which he believes will continue to support earnings and margins well into 2027.
The core of Chin’s thesis is a significant gap between supply and demand. Industry checks indicate DRAM bit shipment growth may slow to 15%-20% in calendar 2027, down from the mid-to-high 20% range expected in 2026. However, demand requires supply growth of over 40% to bridge the deficit, a shortfall that Chin expects to keep memory pricing unusually strong and sustain Micron’s profitability.
Margin Expansion Driven By Pricing Power
Chin forecasts Micron’s gross margin will reach 87% in the September quarter and rise to 88.2% in the November quarter. This expansion is driven primarily by pricing rather than volume growth. He projects fiscal Q4 revenue of $50.78 billion with adjusted earnings of $32 per share, followed by November-quarter revenue of $56.4 billion, representing roughly 11% sequential growth fueled by higher contract prices.
HBM4 Demand Adds Premium Upside
Next-generation AI accelerators are creating a new layer of upside for Micron through High Bandwidth Memory 4. Chin expects the price per bit for HBM4 to double as these chips require more premium memory. This dynamic reinforces the analyst’s view that the current memory upcycle is durable, with supply constraints likely persisting until new capacity comes online around mid-2027.
Key Metrics To Watch In Earnings
Investors should focus on DRAM contract pricing, HBM4 negotiations, and management’s plans for new capacity. As noted in TradingView coverage, the earnings report is increasingly about the durability of the memory shortage rather than simply beating quarterly estimates. If Micron confirms that supply remains constrained into 2027 while HBM pricing strengthens, the current upcycle could have considerably further to run, validating the firm’s high valuation.
