Micron pullback seen as buying opportunity amid solid end-demand, says BofA

Micron pullback seen as buying opportunity amid solid end-demand, says BofA

Tue, August 4, 2026 at 11:03 PM GMT+3 2 min read

• MU +0.06%
• BAC +0.56%

Micron Technology Inc (NASDAQ:MU) remains a 'Bu'y at Bank of America, which reiterated its $1,550 price target and viewed the recent pullback in the stock as an enhanced buying opportunity as end-demand, particularly from cloud and AI infrastructure, remains solidly on track.

Shares of Micron traded up 8% at about $895 on Tuesday afternoon, but remains down about 9% over the last month.

Bank of America analysts wrote that while memory prices and gross margins will eventually normalize as additional capacity arrives around mid-2027 through 2028, they believe the recent stock reset reflects investors positioning for an eventual downturn rather than a deterioration in current fundamentals.

The analysts highlighted several factors supporting their view, including the potential for Micron's earnings to remain well above historical peaks even in a downturn, increasing use of long-term agreements, high GPU and HBM utilization and continued hyperscaler spending despite higher component costs.

Bank of America currently models calendar 2028 DRAM and NAND average selling prices declining 10% and 18% year over year, respectively, resulting in estimated EPS of about $150. Even under a bear-case scenario involving 30% and 40% declines in DRAM and NAND ASPs, respectively, the analysts believe Micron could generate roughly $100 in EPS.

That compares with a prior-cycle peak of about $12 in 2018, according to the analysts. A bull-case scenario with broadly flat ASPs in calendar 2028 would imply EPS of about $175, they wrote.

Bank of America also pointed to the growing use of long-term agreements as a factor that could improve supply and demand visibility, although the analysts acknowledged that LTAs may not prevent a downturn. Micron and Samsung have indicated that roughly 50% to 70% of capacity could eventually be covered by LTAs, potentially reducing the risk of uncontrolled supply additions and limiting price volatility over the medium to long term.

The analysts also pushed back on concerns over competition from China-based CXMT, which they estimate now accounts for the low-teens percentage of global wafer capacity. Bank of America wrote that CXMT primarily addresses the consumer and commodity DRAM segment rather than AI-focused products such as HBM3E and HBM4, limiting its competitive threat in AI memory.

GPU rental rates for Nvidia's A100, H100 and H200 remained near all-time highs in July and August, the analysts noted, suggesting continued demand for AI computing. They wrote that the integrated HBM memory in GPUs is a key component in high demand, particularly for AI inference workloads.

Bank of America also noted that the four largest hyperscalers have acknowledged higher component costs in their second-quarter earnings reports, but none indicated that memory was constraining AI deployments. AWS was the only one to attribute an increase in its capital expenditure outlook to memory costs, according to the analysts.