Chipmaker Micron Technology’s (MU) recent earnings report was accompanied by strong sales of high-bandwidth memory (HBM). Interestingly, though, analysts are now concerned about falling profit margins. Indeed, although revenue and guidance beat expectations, the stock is down about 8% after the company warned that margins would decline in the next quarter. As a result, analysts at Needham, Citi, and J.P. Morgan all kept their Buy ratings but lowered their price targets. They pointed to weak NAND pricing and higher costs as reasons why margins might not recover as quickly as hoped.
It is worth noting that Micron’s HBM sales jumped 50% to over $1 billion, which set a new company record. Furthermore, these advanced memory chips are now used in Nvidia’s GB200 and GB300 systems. To illustrate just how strong the demand for these products is, CEO Sanjay Mehrotra said that the company is already sold out of HBM for 2025 and is working with customers to plan 2026 orders. Therefore, Micron is investing $14 billion in new production facilities in Idaho, Singapore, and Taiwan in order to meet this growing demand.
In addition, tariffs don’t seem to be a big issue for Micron at the moment. In fact, Mehrotra said that the company only imports a small amount of products that would be affected by new tariffs on countries like China and Canada. If any costs do come from tariffs, Micron plans to pass them on to customers. Nevertheless, analysts still view Micron as a strong player in the growing AI memory market.
Is MU a Good Stock to Buy?
Turning to Wall Street, analysts have a Strong Buy consensus rating on MU stock based on 14 Buys, one Hold, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average MU price target of $130 per share implies 37.9% upside potential.
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