Micron Stock: A Strong Earnings Display Is Coming, Says Raymond James

Micron (NASDAQ:MU) shares have been on a strong run since bottoming out in April amidst Trump’s tariff fiasco. Since then, the stock has gained 88% with investors appearing increasingly confident the memory giant is well-positioned to capitalize on the long-term growth in AI infrastructure and build on its strong leadership in advanced memory tech.

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Looking ahead to the company’s upcoming fiscal 3Q25 readout (May quarter – slated for June 25), Raymond James analyst Srini Pajjuri expects the company will justify investors’ vote of confidence. “We expect a beat and raise driven by DRAM pricing uptick and solid HBM growth,” the analyst said.

DDR5 contract prices rose more than 6% in May, and NAND pricing is beginning to stabilize, helped by industry-wide supply cuts. While Pajjuri is calling for a 140-basis point decline in gross margins for FQ3 – mainly due to a higher consumer mix and underutilization in NAND – the analyst sees room for upside due to “better pricing.” Meanwhile, GenAI infrastructure spending remains robust, and HBM content per XPU is on course to grow between 30% and 50% this year. “As such,” Pajjuri adds, “we are comfortable with management’s $35B+ TAM projection for 2025 and fully expect MU to achieve its target share by 2HCY25 (low 20%).”

In fact, based on recent supply chain checks, Pajjuri sees a “good possibility” of additional share gains in 2026. Demand for high-density, low-power server DRAM modules and a potential memory content boost in the iPhone 17 are additional tailwinds. And while consumer-related pull-ins and tariff risks remain, he believes the current DRAM up-cycle, driven by HBM strength, is likely to extend “well into 2026.”

Micron is now shipping 12-high HBM3E at scale for GB300 systems and has begun sampling HBM4, which should help extend its leadership in HBM technology. Pajjuri estimates that 12-high configurations command roughly a 10% ASP premium, while HBM4 could see an even larger premium – between 20% and 30% – driven by its larger die size (with a trade ratio of 3.5 to 4 times) and the higher manufacturing costs of the base die at third-party foundries. The analyst currently expects around $1.5 billion in HBM revenue for the May quarter, with potential upside given “tight supply and customer ramps.”

Bottom line, Pajjuri maintained an Outperform (i.e., Buy) rating on MU shares although his $120 price target implies the stock is fully valued. (To watch Pajjuri’s track record, click here)

It’s a similar story amongst Pajjuri’s colleagues. On the one hand, the stock claims a Strong Buy consensus rating, based on a mix of 17 Buys vs. 3 Holds. However, the $124.89 average target suggests the shares will stay rangebound for the time being. It will be interesting to see whether analysts update their targets or downgrade their ratings shortly. (See Micron stock forecast)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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