Micron (NASDAQ: MU): UBS Hikes Price Target to $155 on HBM Strength

Q3 2025: Record Performance Driven by HBM and AI

Micron reported record fiscal Q3 2025 results, underscoring the company’s transformation from a cyclical memory supplier to a structural beneficiary of the AI boom.

Revenue: $9.3 billion, up 15% sequentially and 37% year-over-year, exceeding consensus estimates.
Non-GAAP EPS: $1.91, more than tripling from $0.62 a year earlier, and beating analyst forecasts by over 20%.
Gross Margin: 39%, up 110 basis points sequentially, driven by strong pricing and a favorable product mix.
Operating Cash Flow: $4.61 billion, reflecting healthy free cash generation and liquidity.
HBM Revenue: Nearly 50% sequential growth; HBM now represents roughly 20% of DRAM output and is “sold out” for 2025.

Micron’s HBM3E chips, essential for AI accelerators like NVIDIA’s H100 and AMD’s Instinct GPUs, are a key driver. Data center revenue more than doubled year-over-year, reaching an all-time high as hyperscalers ramp up generative AI infrastructure.

AI-Driven Tailwinds: DRAM and NAND Growth

The AI revolution is fundamentally reshaping memory demand profiles:

DRAM Bit Growth: FY25 guidance now calls for high-teens year-over-year growth, fueled by AI server deployments and next-generation GPUs.
NAND Bit Growth: Projected at mid-teens for the full year, with a strategic shift toward high-density, enterprise, and hyperscaler SSDs.
AI Capex: Hyperscalers like Google, Microsoft, and AWS are accelerating AI infrastructure spend, driving demand for HBM and advanced DRAM.

Micron’s advanced One Gamma process node, offering 30% higher bit density, is ramping faster than prior generations and positions the company to capitalize on both data center and edge AI markets.

Q4 2025 Guidance: Acceleration Continues

Micron’s forward guidance signals continued momentum:

Revenue: $10.7 billion (±$300 million), up 15% sequentially and well above consensus estimates.
Non-GAAP EPS: $2.50 (±$0.15).
Gross Margin: 42–43%, reflecting higher HBM mix and ongoing pricing strength.

Management expects HBM to approach parity with Micron’s overall DRAM market share by late 2025, further enhancing margin visibility and earnings durability.

UBS Bullish Case: Why the $155 Price Target?

UBS’s price target hike from $120 to $155 is anchored in several structural factors:

HBM Mix Lifting Margin Trajectory: HBM’s premium pricing and supply constraints allow Micron to allocate capacity to the highest-value markets, decoupling from traditional DRAM cycles.
Supply Discipline: Industry peers are adding capacity cautiously, supporting favorable pricing and preventing oversupply.
AI Infrastructure Upside: Multi-year tailwinds from generative AI, cloud, and edge deployments are expanding the total addressable market for advanced memory.
Node Efficiencies: Advanced process nodes (e.g., One Gamma) are improving bit density and cost structure, supporting long-term margin expansion.
Valuation: UBS applies a 22x multiple to FY26E EPS (now estimated at $14), reflecting higher earnings durability from HBM and AI-driven revenue streams.

Other analysts echo this optimism, with price targets ranging from $145 to $185, citing Micron’s leadership in HBM, robust AI demand, and strategic manufacturing investments.

Risks and Industry Dynamics

While Micron’s outlook is robust, certain risks remain:

Supply Chain and Geopolitical Risks: U.S.-China trade tensions and potential overcapacity if rivals accelerate HBM ramp.
NAND Volatility: Consumer NAND remains a margin headwind, though Micron is shifting capacity toward higher-value segments.
AI Adoption Pace: Delays in hyperscaler AI rollouts could impact near-term HBM shipments.

However, Micron’s technological lead, supply discipline, and strategic partnerships with GPU leaders (NVIDIA, AMD) mitigate many of these risks.

Strategic Investments and Long-Term Vision

Micron is investing aggressively in advanced manufacturing and U.S.-based capacity, with plans to double HBM output by 2026 and a $200 billion commitment over two decades to support AI-centric growth. These investments are designed to ensure Micron remains a key enabler of the AI infrastructure wave.

Conclusion

Micron’s record Q3, bullish Q4 guidance, and HBM-driven margin expansion have validated the company’s strategic pivot to AI memory leadership. UBS’s $155 price target reflects a new era for Micron—one defined by structural, not cyclical, growth. As AI infrastructure spend accelerates, Micron is poised to capture an outsized share of the $100 billion+ memory market, with HBM at the center of its value proposition.

Disclaimer

The information provided on this website is for informational and educational purposes only and does not constitute financial, investment, legal, or tax advice. The content, including any analytics, commentary, opinions, or data, is not intended as a recommendation to buy, sell, or hold any security or investment strategy. All investments in equities and other financial instruments involve significant risk, including the potential loss of your entire investment.

Past performance is not indicative of future results. The value of investments can go down as well as up, and there is no guarantee that any investment strategy will achieve its objectives or that any information provided will result in profits or prevent losses. The analysis and opinions expressed on this website are based on publicly available information and sources believed to be reliable, but we do not guarantee their accuracy, completeness, or timeliness.

We are not registered investment advisors, brokers, or dealers. You should not rely solely on the information provided here to make investment decisions. Before making any investment, you should conduct your own research and due diligence, and consult with a qualified financial advisor or other professional who is familiar with your individual circumstances and objectives.

By using this website, you acknowledge and agree that you are solely responsible for your own investment decisions and that the website and its contributors are not liable for any losses or damages arising from your use of the information provided.