Micron Shares Rise After Bank of America Turns More Positive on Memory Sector
Yahoo Finance ·
Micron Technology shares climbed 2% after Bank of America analyst Vivek Arya reaffirmed his Buy rating and $1,550 price target following executive meetings, expressing an incrementally more positive stance on memory chips. SK hynix also gained 3% amid positive cash flow developments. According to Arya, memory customer agreements now span three to five years instead of the traditional one year or less, with discussions for 2031 supply already underway. These extended contracts cover over 35% of revenue through 2030 and feature floor prices that should deliver record margins, helping the current upcycle outlast previous booms. Analysts project Micron's revenue will grow from $133 billion in fiscal 2026 to $319 billion in fiscal 2028, with free cash flow potentially reaching $150 billion to $200 billion annually in 2027 and 2028, compared to $59.0 billion in fiscal 2026. Furthermore, Micron's new $35.2 billion buyback is set to begin on Dec. 9. Meanwhile, SK hynix is reviewing a special dividend of approximately ₩16 trillion from its Kioxia stake sale, with a decision expected during its Oct. 28 third-quarter earnings announcement. Despite these robust fundamentals, Micron trades at 5.0x forward earnings, leaving the upcoming December fiscal first-quarter report as a major catalyst.
AI 시장 분석
Following a meeting with Micron's management, Bank of America maintained a positive outlook on the memory market, driving up the share prices of both Micron and SK Hynix. The extension of long-term customer contracts to 3-5 years and the introduction of minimum price guarantee systems are expected to mitigate the extreme volatility of the past. With continuous revenue growth projected through 2028, investors should verify fundamentals through the upcoming December earnings report.
상승 영향
- Semiconductors — Contract periods with clients have lengthened to 3-5 years and minimum price guarantees have been introduced, which is expected to ease memory market volatility and enhance earnings stability.
DYAX 전담 분석
Micron and SK Hynix are increasingly likely to break free from their historically extreme boom-and-bust cycles through 3-to-5-year long-term supply contracts and minimum price guarantee mechanisms. Micron's projected free cash flow is expected to surge to 150 billion to 200 billion dollars annually between 2027 and 2028, expanding its capacity for shareholder returns.
The bullish scenario is that the expansion of long-term contracts will prove the earnings stability of memory semiconductor companies, highlighting their undervalued appeal, while the bearish scenario is that oversupply driven by new fab expansions in 2027-2028 will outpace demand. Key watch points are Micron's earnings release in December and the progress of its 35.2 billion dollar share buyback program.
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