Micron closes in on $1 trillion market value as UBS triples share price target

Shares of Micron Technology climbed about 14.2% in early trading on Tuesday after brokerage UBS sharply raised its target price for the stock citing ​stronger AI demand and long-term supply deals, taking the ‌chipmaker closer to $1 trillion in market value.

The revised target – the highest among the 46 brokerages covering the stock – implies a potential valuation of ​close to $1.8 trillion for the company by the next ​twelve months, compared with a market capitalization of $846.93 billion ⁠as of close on Friday.

UBS raised the price target more than ​threefold to $1,625 from the earlier $535, compared with the stock’s Friday close of $751.

The brokerage ​said the emergence of long-term agreements across the industry, locking in volumes and partially fixing prices could stabilize Micron’s historically volatile earnings profile.

These deals ​are expected to cover a growing portion of DRAM supply, ​providing greater demand visibility and reducing pricing swings, according to the brokerage.

There ‌was “no ⁠reason” Micron should trade much differently from Nvidia on a price-to-earnings basis as long-term agreements and AI-driven demand reshape the company’s earnings and visibility, UBS said.

The brokerage added that hyperscalers are increasingly ​willing to trade ​pricing flexibility ⁠for long-term supply assurance, a shift that underpins the contracts and helps stabilize the sector.

As ​a result, UBS expects Micron to command a ​higher valuation ⁠multiple, moving closer to other semiconductor peers as investors gain confidence in its longer-term earnings durability.

Micron was trading at 8.42 times ⁠expected ​earnings over the next 12 months, ​compared with 21.1 for the benchmark S&P 500 index and 24.66 for the ​Nasdaq 100.