Micron Faces a Rerating Moment as Sold-Out HBM Supply Reshapes the Earnings Story

Core Viewpoint - Micron Technology is experiencing a significant shift in its earnings story due to sold-out HBM (High Bandwidth Memory) supply, which is expected to reshape its revenue visibility and reduce memory cycle volatility [1]. Financial Performance - Micron's current stock price is $396.57, with a market cap of $449.46 billion and a P/E ratio of 37.72. The stock has increased by 544% from its 52-week low and is 12.8% below its peak [1]. - The company is projected to report an EPS of $8.58 on March 18, 2026, with a revenue of $19.07 billion, indicating a 450% year-over-year earnings growth [1]. - Gross margin guidance stands at 68%, significantly higher than the trailing gross margin of 45.31% [1]. Supply Dynamics - The entire 2026 HBM supply is sold out under multi-year contracts, marking a structural shift in procurement practices from quarterly negotiations to longer-term agreements [1]. - Key customers are receiving only 50-67% of their demanded HBM volume, indicating a tight supply situation that is expected to persist [1]. - New capacity additions will not significantly impact 2026 production, with meaningful volume expected only in mid-2027 [1]. Growth Projections - Micron's forward revenue growth is projected at 57.25%, which is 461% above the sector median, with forward EBITDA expansion estimated at 99.38% [1]. - The company is expected to achieve an EPS of $33 in 2026, which is more than four times the current earnings base, leading to a price target of $990 based on a 30x P/E ratio [1]. Market Position - Micron is positioned as a Strong Buy at its current price, with a target of $1,000, supported by its sold-out HBM supply and strong gross margin guidance [1]. - The company is funding significant capital expenditures to enhance its fabrication capacity across multiple continents, which is expected to protect its pricing power in the HBM market [1].