‘Load Up for the Long Term,’ Says UBS About Micron Stock

Micron (NASDAQ:MU) stock has underperformed vs. the broader market over the past year as the prospect of oversupply in the memory industry has weighed on the shares.

UBS’s Timothy Arcuri, an analyst who ranks in 3rd spot amongst the thousands of Wall Street stock pros, confirms that view, saying that industry checks show that “mild DDR oversupply” in 1H25 is behind ongoing softness in pricing.

“We estimate that DRAM customers’ inventories increased by 1-2 weeks Q/Q in 4Q24 with 12-13 weeks of inventories for smartphone customers, 17-18 weeks for PC customers and 16-17 weeks for hyperscalers,” the 5-star analyst explained.

With near-term inventory digestion “stretching for a bit longer than previously expected,” sans HBM, Arcuri is Expecting DDR4 and DDR5 pricing to be down sequentially in both 1Q25 and 2Q25 (albeit showing some improvement in the latter), ahead of stabilization in 3Q25, before a recovery in 4Q25/1Q26 (+5%/+7%).

While that all sounds like a rather muted outlook for now, the analyst believes Micron has an ace up its sleeve.

“We remain bullish on MU’s HBM roadmap – especially for HBM3E 12-Hi at NVDA given competitor qualification delays – and Micron was incrementally positive on its HBM progress/ opportunity at CES,” Arcuri said.

The analyst anticipates Micron will begin shipping HBM3E 12-Hi in March or April, while preparations for HBM4 remain on track for 2026. Meanwhile, the acquisition of AUO’s LCD facility in Taiwan is anticipated to provide additional capacity for back-end HBM production, potentially offering “upside opportunity” as early as C2Q25. The analyst sees Micron’s HBM production capacity reaching approximately 65,000 wafers per month by the end of 2025, all of which are already sold out with locked-in pricing, and rising to about 100,000 wafers per month in 2026.

Additionally, Arcuri’s forecast now includes HBM in 2026, with the analyst expecting total market shipments will reach approximately 4.88 exabytes, representing 43% year-over-year growth. This suggests HBM will account for 7% and 9% of DRAM bit demand and 30% and 32% of total DRAM revenues in 2025 and 2026, respectively. For Micron, specifically, he has increased the forecast for 2026 HBM bit shipments from 1.09EB to 1.12EB. Arcuri thinks Micron’s HBM bit share in 2025 should reach around 20%, about the same as its global DRAM market share, while HBM revenue is expected to rise significantly from about $1.3 billion in 2024 to $8.2 billion in 2025 and $14 billion in 2026.

Summing up, Arcuri’s advice is to look further ahead rather than just in the near term.

“While it is a bit hard to see an immediate catalyst, we see no change in the big picture story here – MU has established technology leadership and the HBM ramp is siphoning wafers away from traditional PC/smartphone memory markets meaning that the market is going to get very tight once again if we see any sort of traditional server refresh or AI PC cycle,” Arcuri noted.

To this end, Arcuri assigns a Buy rating for MU shares, while his $125 price target factors in a one-year gain of 28%. (To watch Arcuri’s track record, click here)

Arcuri is far from the only bull – 19 other analysts have issued Buy recommendations, while only 2 Hold ratings leave the stock with a Strong Buy consensus. With an average price target of $136, the projections indicate a ~40% upside in the coming months. (See Micron stock forecast)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.