Micron Technology shares climbed above $880 in premarket and early trading, setting a fresh record high. The move followed a bullish report from UBS dated May 26, 2026, where analyst Timothy Arcuri raised the stock’s price target from $535 to $1,625 and kept a Buy rating. That new target implies more than double the upside from Micron’s $751 closing price on May 22.
Long-term AI contracts reshape the memory cycle
UBS argued that the memory business is no longer moving through the same boom-and-bust pattern that defined prior cycles. The bank said hyperscale cloud companies are signing long-term supply agreements to secure components for AI server buildouts, changing visibility on both pricing and demand.
According to the report, those agreements now lock in 30% of DDR capacity and as much as 60% to 70% of server DDR5 supply. UBS extended its DRAM shortage forecast from late 2027 to the second quarter of 2028. It also expects NAND shortages to last through the end of 2027. For HBM, the firm lifted its average selling price growth estimate from 35% to 50%.
Earnings estimates move sharply higher
With stronger order visibility, UBS increased its earnings forecasts for the next several years. The bank now sees Micron generating $155 in EPS for 2027, up from a prior estimate of $133. It projects $167 in EPS for 2028 and $117 in EPS for 2029.
UBS also said cumulative free cash flow could exceed $400 billion by 2029. Based on that view, the firm applied a valuation of roughly 15 times projected 2029 earnings, discounted by one year, arguing that Micron deserves a multiple closer to AI growth stocks than to a traditional memory manufacturer.
Huge gains have not removed the risk of volatility
Micron’s rally has already been extreme. The stock is up more than 200% in 2026 and nearly 800% over the past year, according to the source material. At the same time, the report noted that Micron’s trailing P/E is around 35x, while forward P/E sits near 7x to 8x.
The source also pointed to risks that could disrupt the current cycle. A future wave of aggressive capacity expansion by rivals could reverse supply conditions, and geopolitical tensions could also become a variable. Investors are now watching Micron’s next quarterly earnings release at the end of June for confirmation that AI-driven memory demand is holding up as expected.