Micron (MU) Stock Soars 15% — Then Pulls Back. Here’s What Wall Street Thinks Now

TLDR

• Micron stock surged 15.74% on Thursday after reporting adjusted EPS of $25.11 on revenue of $41.46 billion, then pulled back over 5% in Friday premarket
• The company posted an 85% gross margin in Q3 and guided for ~86% in Q4, with Q4 revenue guidance of ~$50 billion
• Micron has signed 16 multi-year take-or-pay supply contracts with customers, covering an expected 40% of revenue through 2030
• Analysts raised EPS estimates dramatically post-earnings — the consensus FY forward EPS now stands at $144.27, up from $101.74 last month
• Barclays raised its price target to $2,000; the average analyst price target sits at $1,477.17, with 50 analysts holding a Buy rating

Micron Technology (MU) stock jumped 15.74% on Thursday after the memory chipmaker posted blowout fiscal third-quarter results. By Friday premarket, the stock had given back more than 5%, trading around $1,150, as investors locked in gains after the sharp move higher.

Micron Technology, Inc., MU

The numbers were hard to ignore. Micron reported adjusted EPS of $25.11 on revenue of $41.46 billion. Adjusted gross margin came in at 84.9%. For Q4, the company guided for adjusted EPS of around $31 and revenue of roughly $50 billion.

CEO Sanjay Mehrotra said on the earnings call that customers are now aware supply shortages in memory and storage “will take considerable time to improve.” He added that even with gradual supply improvement expected in 2028, the company currently has no line of sight on when memory supply will catch up to demand.

The memory shortage stems from decisions made during the post-pandemic down cycle. In 2023, Micron posted negative gross margins for four straight quarters and pulled back on capital expenditure plans. Those decisions have now left the industry with the tightest supply it has ever seen.

New manufacturing capacity won’t come online until roughly 2027, with more slated for 2028. That gap is giving Micron pricing power it has never had before.

Long-Term Contracts Lock In the Upside

Micron has used that leverage to lock customers into three-to-five-year take-or-pay agreements with price floors and ceilings and upfront cash deposits. The company has signed 16 such agreements so far, which will cover around 40% of revenue once fully executed.

The price floor on these contracts is set “well above” peak quarterly margins from any prior cycle, Mehrotra said. For reference, the previous peak was 61% in Q4 2018. Half of Micron’s quarters since 2010 came in below 32% gross margin — so locking in 60%+ floors through 2030 is a structural change, not a cyclical blip.

BNP Paribas analyst Karl Ackerman called it a “transformative shift towards long-term supply agreements,” which supports demand assurance and reduces cyclicality. Bank of America’s Vivek Arya went further, telling CNBC the memory industry is seeing a structural change rather than a typical cycle, driven by AI demand and tighter supply discipline. He noted memory now accounts for 35–40% of cloud capital spending.

What Analysts Are Saying

Following the earnings print, 35 of 42 analysts tracked by FactSet raised their EPS forecasts. The consensus forward EPS estimate jumped to $144.27 from $101.74 just a month ago.

Barclays raised its price target to $2,000. Citigroup moved to $1,400. Goldman Sachs, which holds a Neutral rating, lifted its target to $1,100. The average analyst price target across 50 Buy-rated analysts now sits at $1,477.17.

Despite the post-earnings rally, the stock still trades at less than 10 times forward earnings on some measures — well below the S&P 500 multiple.

Micron hit a 52-week high of $1,255 in June. Key resistance sits at that level, with the nearest support at the 20-day moving average around $1,025. As of Friday premarket, MU was trading at approximately $1,150.

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