Wall Street analysts love Micron’s earnings. The market already loved them too much ahead of time.
A “sell the news” event.
Micron announced phenomenal fourth-quarter results: a top- and bottom-line beat along with guidance on earnings and profitability for the current quarter that exceeded every Wall Street analyst’s expectations.
And yet the stock is lower, even as the sell side largely sings the memory chip specialist’s praises.
In all, about a dozen analysts hiked their price target on Micron in the wake of these results.
“The company indicated its high bandwidth memory customer base has now increased to six customers and expects to sell out the remainder of its 2026 HBM supply within the next few months,” Needham & Co. analyst N. Quinn Bolton wrote, lifting his price target to $200 from $150 and maintaining a “buy” rating.
Bank of America kept its “neutral” rating on the shares, but lifted its price target to $180 from $140.
“Micron is benefitting from the dual-drivers of surging AI demand (driver of high bandwidth memory or HBM sales) and the memory industry’s (abnormal) supply discipline that has pushed up pricing in traditional (D4) and new (D5) markets,” analyst Vivek Arya wrote.
The problem seems to be that Wall Street has been in catch-up mode on the company, leading to a bit of a “sell the news” event.
On August 11, Micron told investors that the results it just reported would be better than management previously expected. And in September, the stock went on an absolute tear, with a record 12-session winning streak that pushed the price above the average target from the sell side. That move occurred amid a bevy of positive news on the persistence of the AI build-out, headlined by purchase commitments from OpenAI that range from $10 billion (with Broadcom) to the hundreds of billions (with Oracle). Micron’s memory chips are slated to play a supporting role in this continued aggressive development of AI infrastructure.
It’s much easier to say with hindsight that these fantastic results and outlook were priced in. But even a cursory look at the above chart would suggest that Micron needed to be an Olympic-level hurdler to clear the bar the market had set for this quarter.
“We made the case in our preview that even with excellent near term conditions, that the stock is nearing peak valuation if we treat them the way that we would historically treat a memory business,” wrote Morgan Stanley’s Joseph Moore, who kept his “neutral” rating and $160 price target intact following these results. “The stock is expensive on book value, extremely expensive on FCF metrics (which is our primary rationale for buying a memory stock), and is inexpensive on near term earnings, but expensive on cycle adjusted earnings.”
Even with today’s drop, shares of Micron are still up more than 30% this month.
