RBC Initiates Micron (MU) at Outperform, Sees $50+ Peak EPS Potential From HBM Upside

Core Viewpoint - Micron Technology, Inc. is gaining attention in the AI stock market, with RBC Capital initiating coverage with an Outperform rating and a price target of $425, highlighting a peak EPS potential exceeding $50 due to a favorable High Bandwidth Memory (HBM) mix [1][3]. Group 1: Market Dynamics - The current memory market is experiencing tightness driven by surging demand from Generative AI and improved supply discipline, leading to discussions about long-term agreements (LTAs) [2]. - Limited clean room capacity and structural supply constraints may extend the memory upcycle into 2027, despite investor skepticism regarding LTAs in commodity memory markets [2]. Group 2: Company Performance and Outlook - Micron's roadmap is robust, with HBM content growing at a rate exceeding 50%, particularly with the transition to HBM4, which is expected to provide a significant tailwind for the company [3]. - The firm believes that a higher peak valuation multiple is justified for Micron due to its non-commodity HBM mix, supporting the outlook for peak earnings potential of over $50 [3].