Micron Joins $1 Trillion Market Cap Club

There’s another one for the memory books.

Shares of Micron surged nearly 20% on Tuesday, enabling the maker of critical high-bandwidth memory (HBM) to join a dozen or so members of the exclusive $1 trillion market cap club. The big bounce came after a big endorsement from UBS analyst Timothy Arcuri. Oh, and a big weekend shoutout from the president of the United States probably helped as well.

Short-Term Memory Loss

The computer memory shortage has proven to be perhaps the most critical supply bottleneck in recent memory. According to a Bloomberg analysis of this season’s earnings calls and reports, memory pricing was mentioned more than 550 times, the most in any full year in records dating to 1999. In turn, HBM now accounts for roughly two-thirds of the total AI chip component cost, up from about 50% in early 2024, according to data research firm Epoch AI. And while historical sector-wide seasonality has long left memory-makers skeptical of the lengthy, costly process of increasing production capacity, demand is now so strong that chip industry leaders like Nvidia CEO Jensen Huang are positing (or at least very publicly hoping for) the end of cyclicality. Micron even broke ground earlier this year on a $100 billion memory-making plant in upstate New York that will be the biggest fab facility in the US.

Surging HBM prices and the long tail of demand are key reasons why Acuri thinks Micron’s stock, which was already up some 140% year-to-date and 840% in the past 12 months heading into Tuesday, still has room to grow. The company has locked in long-term agreements with major clients at around current price levels, Acuri said in the note. He raised the stock’s price target to $1,625 from $535, by far the boldest claim on Wall Street but hardly the only bullish outlook: 

• Also on Tuesday, Mizuho Securities analyst Vijay Rakesh reiterated an outperform rating and called Micron his “top pick” while predicting the memory shortage would last through at least next year.
• Meanwhile, Bridgewater, the world’s largest hedge fund, said in filings earlier this month that it was increasing its stake in the company by 66%, and ​​Appaloosa Management recently moved to make Micron the second-largest holding in its portfolio.

Marvellous: Micron wasn’t the only chips player to be a major market mover on Tuesday. Shares of rival memory makers SK Hynix and Sandisk rode the momentum to 5% and 7% climbs, respectively. Meanwhile, shares of Marvell Technology, which designs bespoke AI chips and components, climbed 6% on the eve of its next earnings call after scoring an upgrade from HSBC analysts.