UBS reiterated its Buy rating on Micron Technology and set a $162.5 price target, implying about 48% upside from the Sept. 22 closing price of $109.6. In its Sept. 23, 2026 preview note for FQ4:26, the bank said investor debate has moved from whether the cycle has peaked to how long the upturn can last.
UBS said the supply-demand gap in dynamic random access memory, or DRAM, should keep widening through 2027. Its industry view includes roughly 80% bit demand growth for server DDR and more than 100% bit demand growth for server and storage solid-state drives, or SSDs.
UBS raised its calendar 2027 to 2029 earnings-per-share forecasts to $21.2, $27.7 and $21.9, with the 2028 and 2029 figures above market consensus. UBS analyst Timothy Arcuri said Micron’s FQ4:26 revenue should reach $5.24 billion, slightly above the top end of guidance, while gross margin is seen at 87.6%, about 160 basis points above guidance. For FQ1, UBS expects revenue guidance of $5.8 billion to $5.9 billion, with gross margin up another 100 basis points quarter over quarter.
Pricing drove the expected FQ4 beat
UBS said Micron’s FQ4 outperformance was driven almost entirely by stronger pricing.
Of the projected $5.24 billion in FQ4 revenue, DRAM is expected to contribute $3.97 billion. DRAM bit shipments are seen rising 3% sequentially, while average selling prices climb 23% from the prior quarter. Within that, DDR revenue is forecast at about $3.62 billion, with bit shipments up 2% and average selling prices up 24%, broadly in line with UBS’s estimate for a roughly 26% sequential increase in industry contract pricing.
High-bandwidth memory, or HBM, revenue is expected at $350 million, with bit shipments up 9% and average selling prices rising 10%.
NAND revenue is projected at $1.27 billion, with bit shipments up 4% and average selling prices up 23%. UBS said that matches its estimate for an approximately 23% sequential rise in industry contract prices. The bank expects NAND pricing to peak in the third and fourth quarters of 2027. It also said YMTC is shifting around 30,000 wafers per year of capacity toward DRAM instead of NAND, extending the NAND pricing cycle.
On margins, UBS expects Micron’s gross margin to peak at about 91% between the fourth quarter of 2027 and the first quarter of 2028. It forecast overall gross margin at 85.6%, 90.2% and 89.5% for calendar 2026 through 2028.
UBS sees DRAM undersupply lasting at least into Q2 2028
UBS said its channel work indicates DRAM fulfillment remains in the roughly 60% range. With server DDR bit demand growing about 80% and server plus storage SSD bit demand potentially exceeding 100%, the supply gap remains a central part of the thesis.
The report said Micron has already signed long-term agreements, and those deals are starting to cap additional upside in revenue. Investor attention, UBS said, has shifted toward demand durability and capital returns.
On the supply side, CXMT’s share of DRAM bit supply is expected to rise from about 7% in 2025 to about 9% in 2027. UBS said market concerns about CXMT’s capacity expansion are overstated because installation progress, yield and the technology gap remain constraints. On that basis, the bank expects the DRAM market to stay undersupplied at least through the second quarter of 2028.
For HBM, UBS slightly lowered Micron’s calendar 2027 HBM bit shipment forecast to about 11.72 billion Gb. The note said Nvidia Rubin Ultra specifications have changed, with the first VR300 variant using 384GB of HBM4 per GPU and later versions shifting to 512GB of HBM4E in the third quarter of 2027, below a previous estimate of 768GB. UBS said tight supply can be offset by allocating shipments across more racks.
UBS also said memory suppliers are widening price premiums again in HBM and DDR. It expects Micron’s calendar 2027 blended HBM average selling price to rise about 76% year over year.
Buyback restrictions are set to expire on Dec. 9
UBS said limits on Micron stock buybacks are close to ending. According to the report, CHIPS Act restrictions on repurchases expire on Dec. 9, 2026.
The bank expects Micron to begin buybacks in FQ2:27, which it identified as February 2027, at about $2 billion per quarter. UBS then sees that figure rising quickly to $4 billion to $5 billion. The report added that Micron may not disclose buyback details in advance on the upcoming earnings call.
UBS forecast fiscal 2027 capital expenditures at about $5.1 billion, above its prior estimate, though implied capital intensity remains in the low-teens percentage range. It also projected calendar 2027 revenue at $28.22 billion and calendar 2028 revenue at $37.68 billion.
Valuation framework uses 8x NTM earnings
UBS said its $162.5 price target is based on about 8x next-12-month earnings, applied to calendar 2029 EPS of about $21.9 and discounted back to calendar 2028 using a cost of equity of about 12.2%. The report also said tangible book value per share should reach about $36 by the end of calendar 2028, implying roughly 4.5x.
UBS said its positioning case for Micron rests on three points: the DRAM supply-demand gap extends through 2027 and pricing keeps beating expectations; buyback restrictions expire in December and quarterly repurchases could rise from $2 billion to $4 billion-$5 billion; and calendar 2029 EPS of $21.9 would still leave trough annualized earnings above the level implied by next-quarter guidance even under a cyclical downturn scenario.
The article was presented by Chaoxiang Research as a整理 and interpretation of a third-party brokerage report from UBS dated Sept. 23, 2026, combined with public market information. The quoted rating, target price, earnings forecasts and related judgments are the views of the brokerage analyst and represent only the position of that institution. They do not represent the views of TechFlowPost or Chaoxiang Research and do not constitute investment advice.
The piece also stated that market risk exists and decisions should be made independently, and that the article should not be used as a basis for buying or selling any security.
