BofA Reiterates Buy on Micron with $1,550 Price Target
Alina Collins
BofA analyst Vivek Arya reiterates a Buy on Micron with a $1,550 target, arguing AI infrastructure spending is turning memory chips from a cyclical commodity into a strategic asset — and the current pullback is an entry window.
How far has Micron fallen, and what spooked the market?
Micron pulled back from above $1,200 in late June to around $957, caught in a broader memory-chip sell-off.
Yet Micron rose 0.9% after hours, while South Korea's SK Hynix jumped more than 5% the same session. This means → the heaviest selling pressure may be fading, with buyers starting to test the waters.
What underpins BofA's $1,550 call?
Arya estimates Big Tech will spend roughly $1.5 trillion on global cloud and AI infrastructure by 2027 — up 40%–50% from this year.
Memory components will account for 35%–40% of that total. In plain terms = for every $10 spent building AI, close to $4 goes to memory — and Micron sits squarely in that path.
This means → BofA's thesis is not about a short-term bounce; it rests on the sheer scale of AI capex elevating memory to "essential-infrastructure" status.
"Memory is no longer cyclical" — does that hold up?
Arya's key claim: the market underestimates memory's shift toward long-term contracts and predictable pricing.
He writes: "As memory evolves from a cyclical commodity into a strategic AI enabler, valuation multiples should expand."
In plain terms = memory-chip prices used to swing like a commodity. If customers start locking in long-term deals and pricing becomes predictable, the market should re-rate the sector higher — think of it as moving from "selling coal" to "selling electricity."
How did Arya arrive at $1,550?
He uses a sum-of-the-parts model — valuing each business line separately, then adding them up: legacy cyclical memory at roughly 3× 2028 book value.
The high-bandwidth memory (HBM) unit — fast memory purpose-built for AI chips — is valued at 31× 2028 earnings.
This means → BofA strips HBM out of the cyclical bucket and assigns it a far higher growth premium. Whether the market accepts this "split-and-re-rate" framework is the key test for any move toward $1,550.
Content is for reference only, not financial advice.