Micron Price Target Boosted to $1,520 at Baird on Stronger AI Demand, Higher Chip Pricing

Investment firm Baird has significantly raised its price target for Micron Technology (MU) to $1,520 from a previous $1,280, citing a powerful combination of surging AI-driven demand and tightening supply in the memory chip market. The firm maintained its Outperform rating on the stock in a note published Monday.

AI Demand and Supply Squeeze Fuel Optimism

Baird analyst Tristan Gerra wrote that he is "incrementally positive" on Micron's near- and medium-term prospects. This outlook is driven by a surge in demand for AI agents, which the firm notes has extended lead times for Nvidia GPUs from six weeks to nearly 40 weeks over the past three months.

On the supply side, Baird forecasts that total DRAM supply growth will slow from over 30% this year to 20% in 2027. This dynamic is expected to create a favorable pricing environment, with the firm stating that "acute shortages are expected to persist in 2027."

Higher Pricing Forecasts

Reflecting the tightening market conditions, Baird revised its pricing assumptions upward for key memory products. The firm's updated forecasts include:

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• DRAM: Contract prices are expected to rise 20% quarter-over-quarter in the third quarter, followed by an additional 10% increase in the fourth quarter.
• Enterprise DDR5: Prices for this type of server memory are projected to climb another 15% to 20% in the fourth quarter.
• NAND: Flash memory prices are forecast to jump 20% in the third quarter and a further 5% to 10% in the fourth quarter.

HBM Margins and Market Outlook

A key part of Baird's bullish thesis centers on High-Bandwidth Memory (HBM), a specialized chip essential for AI accelerators. The firm projects that gross margins on HBM for Micron and competitor SK Hynix could exceed a remarkable 80% by 2027.

This tailwind is supported by an expected acceleration in server unit growth, which Baird sees picking up from 18-19% this year to a range of 20-22% in 2027. Baird's new $1,520 price target implies approximately 40% upside from Micron's closing price of $1,082.28 on the Friday prior to the report's release.