Micron will report fiscal fourth-quarter 2026 results on Sept. 30 for the period ended in August. In its latest research note, JPMorgan kept an Overweight rating on the stock and set a $1,540 price target. Against Micron’s Sept. 25 share price of $1,082.28, that implies substantial upside.
JPMorgan’s argument is not limited to another quarter of strong numbers. The bank says investor focus is shifting. Near-term earnings outperformance is one layer of the story, but the bigger issue is that tight conditions in HBM, DRAM and NAND may last longer than previously expected, while Micron is improving earnings visibility through long-term supply agreements and a clearer capital return framework.
JPMorgan sees another quarter above expectations
JPMorgan expects Micron’s revenue, gross margin and EPS for the quarter to come in above market expectations, with next-quarter guidance also likely to move higher. The immediate support for that view remains straightforward: memory pricing is still rising.
The bank estimates DRAM average selling prices, or ASPs, increased more than 20% quarter over quarter, while NAND ASPs likely rose about 20% over the same period. At the same time, the production ramp for HBM4 12-high continues to accelerate. As of the prior quarter, Micron had already shipped more than $1 billion of related products, and JPMorgan said the ramp pace was about twice that of HBM3E 12-high.
A richer mix tilted toward higher-end HBM products is also lifting margins. JPMorgan said Micron’s gross margin this quarter could exceed the company’s earlier guidance of about 86%, driven by three factors: stronger-than-expected memory price increases, a higher HBM4 mix, and operating leverage as revenue grows faster than expenses.
Management had previously said price increases would slow materially, but JPMorgan does not read that as a sign of weakening demand. Instead, the bank sees it as a deliberate choice to moderate the pace of price increases while supply remains tight, with Micron aiming to secure customer relationships and future demand through longer-term agreements.
HBM undersupply may last through 2028
One of the most important calls in the note concerns HBM supply and demand. A recent market concern has been that changes in some product specifications could free up capacity, ease supply tightness and weigh on future pricing. JPMorgan’s model says that even after fully accounting for that effect, HBM would still remain in undersupply.
Its estimates put the HBM supply-demand gap at about -20% in 2026, around -19% in 2027 and still -16% in 2028. By 2028, cumulative shortages could widen to roughly 23 weeks of supply.
That suggests HBM pricing could still have room to rise in 2027 and 2028 rather than quickly moving into oversupply. JPMorgan said AI remains the core demand variable behind that view.
Micron had previously raised its 2027 HBM market forecast to a level that would 「easily exceed $100 billion」. JPMorgan’s global team is more aggressive, projecting the HBM market at about $160 billion in 2027 and $282 billion in 2028.
If that trend holds, Micron would be exposed not only to the traditional cyclical demand of DRAM and NAND, but also to structural demand growth tied to AI infrastructure.
Supply agreements are becoming a bigger part of the story
JPMorgan places even more weight on SCA, or Supply Commitment Agreement, than on short-term price moves.
Last quarter, Micron disclosed that it had signed 16 SCAs, covering about 20% of DRAM shipments and about 33% of NAND shipments. Among them, 14 agreements carried aggregate remaining performance obligations, or RPO, of about $100 billion. Customers also provided about $22 billion in cash and cash-equivalent commitments, including about $18 billion in cash deposits.
Micron management later said the company had signed additional SCAs. Based on that progress, JPMorgan estimates SCAs may now cover more than 35% of DRAM and NAND bit production, with the potential to reach more than 50%.
For JPMorgan, the significance goes beyond a larger order book. The traditional problem in memory has been that earnings move closely with spot pricing. When supply turns excessive, prices fall quickly, and revenue and profit follow. Long-term supply agreements begin to change that pattern.
As more capacity is locked in through SCAs ahead of time, visibility on Micron’s volumes, pricing and cash flow over the next several quarters, and even years, improves. JPMorgan also said that based on the minimum prices embedded in those agreements, Micron’s future gross margin could remain well above prior cycle peaks even under floor-pricing assumptions.
The note said Micron’s historical peak gross margin was about 62%, while the profit floor implied by the current SCA framework could sit meaningfully above that level. That is a key reason JPMorgan believes investors may need to rethink how they value the company.
AI data center demand is reshaping the revenue mix
The AI shift is already showing up directly in Micron’s revenue mix. JPMorgan expects the company’s data center revenue to reach another record and move well above the annualized revenue run rate that had already exceeded $100 billion in the prior quarter.
Within that, data center SSD revenue, after doubling sequentially in the previous quarter, could top $5 billion again this quarter. The rapid ramp of HBM4 12-high is also pushing the product mix toward higher-value memory.
In JPMorgan’s view, AI is not only increasing shipment volumes. It is changing three variables at once: higher ASPs, higher gross margins and more stable long-term orders. For a company that has historically been tied closely to commodity memory cycles, that combination matters more than price increases alone.
Buybacks could become the next valuation catalyst after Dec. 9
Beyond memory pricing and HBM, JPMorgan highlighted Dec. 9, 2026. That date marks the second anniversary of Micron’s final agreement under the U.S. CHIPS Act.
Under those commitments, Micron will gradually return 100% of excess cash to shareholders after that point, primarily through share repurchases, with dividend growth as a supplement.
JPMorgan estimates Micron’s free cash flow for the quarter ended in August could exceed $24 billion, up more than 30% from about $18.3 billion in the prior quarter. On its projections, cumulative free cash flow over the six quarters from now through the end of 2027 could approach $200 billion.
That shifts the market’s next question. The issue may no longer be whether Micron will buy back stock, but how large the repurchase program could be and how quickly it could begin. If earnings stay elevated and long-term agreements keep improving cash-flow visibility, capital returns could become a fresh valuation driver alongside HBM and memory pricing.
A changing valuation framework
JPMorgan maintained its Overweight rating and set a December 2027 price target of $1,540. The valuation is based on projected FY2028 EPS of $154 and a multiple of about 10 times earnings.
Still, the more important point in the note is the framework behind that target. In the past, the market’s main question on Micron was when memory prices would peak. JPMorgan argues that investors now need to weigh a broader set of factors: structural HBM demand remains strong, DRAM and NAND supply growth is constrained, long-term supply agreements are locking in a growing share of capacity, and Micron is approaching a phase of large-scale cash returns to shareholders.
That leaves the market with a different question: if memory pricing lasts longer, long-term agreements lift the profit floor, and cash flow starts funding large buybacks, should Micron still be treated like the same high-volatility cyclical stock it used to be?