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Bank of America is doubling down on Micron Technology (MU) days before the memory-chip giant faces a major test of 2026.
For the better part of the year, Micron stock has been on fire, surging 276% this year through Sept. 23 and transforming a cyclical chipmaker into one of the market’s hottest AI plays
Momentum has cooled off, with shares gaining about 2% over three months after retreating from their June record.
That pause has sharpened the debate.
Investors are firmly in “show-me” mode with AI and asking whether Micron can preserve the market’s extraordinary pricing, margins, and earnings as new memory capacity enters the market.
Its recent quarterly showing raised the stakes.
Q3 revenue more than quadrupled to a record $41.46 billion, adjusted earnings crushed expectations, and gross margin reached 84.9%. Micron guided toward $50 billion in fiscal Q4 sales.
But Bank of America believes investors are watching the wrong issue ahead of Micron’s Sept. 30 report. Its focus points to what could keep this rally alive.
Bank of America sees 45% more upside in Micron stock
Bank of America analyst Vivek Arya reiterated a Buy rating and $1,550 price target on Micron.
That represents 45% upside from the stock’s Sept. 23 close of $1,071.88, above the 41.4% upside from the report’s reference price.
The thesis is less about another dramatic pricing surprise and more about whether Micron can keep its fiscal 2027 gross margin near its current mid-80% level.
BofA believes that durability can effectively support earnings of $150 to $200 per share, more than double year over year, while leaving the stock valued at only about seven times forward earnings.
That is well below the roughly 10-times multiple Micron has historically sustained.
Near-term industry checks strengthen the case. BofA says most DRAM average selling prices increased 20% to 30% sequentially during Q3, while NAND pricing rose more than 15%. It also assumes at least a single-digit increase during the fourth quarter.
More importantly, hyperscalers are reportedly agreeing to pay higher DRAM prices in the first half of 2027 than during late 2026.
That gives Micron unusual earnings visibility.
BofA’s argument is that investors should focus on margin durability and AI demand, without becoming distracted by the mechanics of its new customer contracts.
