Citi Slashes Micron (MU) Stock’s Price Target – Here’s Why

Micron’s (NASDAQ:MU) recent pullback has taken some investors by surprise. The computer memory maker’s fiscal second quarter results and outlook were exceptional but instead have triggered a massive selloff.

Since reporting on March 18, the stock has fallen 30%, pressured by a mix of profit-taking after a huge run-up, elevated capital expenditure, concerns that margins may have already peaked following a record FQ3 earnings outlook, Google’s introduction of TurboQuant, and the possibility the market is shifting from supply-constrained conditions to one favoring buyers. 

The last point is one that has just been brought up by Citi’s Atif Malik, an analyst ranked 3rd among the thousands of Street stock experts.

After months of steady price increases fueled by strong AI data center demand, the memory market has abruptly shifted direction. Since Micron’s report, prices for mainstream DDR5 16GB DRAM have declined by around 6%.

That said, Malik notes that Micron and its memory peers have started negotiating three- to five-year strategic, long-term agreements with hyperscalers to secure baseline volumes, upfront payments, and adjustments to quarterly pricing in line with market conditions, which Malik thinks should help support contract pricing. Malik also identifies the culprit behind the shift in direction. “We believe spot prices have pulled back on TurboQuant concerns to memory demand,” the 5-star analyst said.

Google’s blog post on TurboQuant last week sent memory stocks into a tailspin. TurboQuant is a compression algorithm aimed at reducing memory usage in AI systems, targeting the key-value cache, which stores recent tokens to speed up model responses.

But Citi anticipates TurboQuant will have effects akin to DeepSeek. While such efficiency gains lower compute and memory cost per query, they also unlock more usage, ultimately driving higher overall demand. Viewed this way, compute demand depends on both per-task requirements and total usage. Whether demand declines will hinge on the gap between how much per-task needs fall with innovation and how much usage rises as costs come down. “Historically, we think cheaper technology has mostly increased the demand for more technology. We see AI as no different,” Malik said on the matter.

Bottom line, Malik has kept his estimates as is, but to account for the recent pullback in DRAM spot prices, he has lowered his Micron price target from $510 to $425, now suggesting the stock will gain 32% over the next year. Malik’s rating stays a Buy. (To watch Malik’s track record, click here)

The Street’s average target remains a higher one; at $533.40, the figure factors in a 12-month gain of 66%. All told, the stock claims a Strong Buy consensus rating, based on a mix of 26 Buys and 2 Holds. (See Micron stock forecast)

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.