Micron's 'Stunning' Q2: Record Margins, Tight Supply And 5‑Year AI Deals

Core Viewpoint - Micron Technology reported a strong Q2 performance, with significant revenue and EPS beats driven by higher DRAM and NAND pricing, leading to multiple analysts raising their price targets for the stock [2][3][4]. Analyst Ratings and Price Targets - Needham analyst N. Quinn Bolton maintained a Buy rating and raised the price target to $500 from $450, citing a "significant beat and raise" in Q2 results [2]. - Rosenblatt analyst Kevin Cassidy also maintained a Buy rating, increasing the price target to $600 from $500, describing the quarter as "stunning" and highlighting new Strategic Customer Agreements [3]. - Goldman Sachs analyst James Schneider kept a Neutral rating but raised the price target to $400 from $360, noting the stock may be range-bound due to elevated expectations [4]. - BofA Securities analyst Vivek Arya maintained a Buy rating and raised the price objective to $500 from $400, emphasizing the importance of memory pricing in AI workloads [6]. Market Dynamics and Pricing Trends - Analysts agree that Q2 was a cycle-defining quarter for Micron, with record revenue and gross margins driven by AI demand and aggressive pricing in DRAM and NAND [8]. - Supply constraints are expected to persist through at least 2026, supported by long lead times for new cleanroom construction and wafer starts [8]. - The introduction of multi-year strategic customer agreements is viewed as a structural shift that could stabilize the memory cycle, although concerns about HBM pricing normalization from 2027 remain [9]. Margins and Future Outlook - BofA cautioned that DRAM spot pricing has begun to stabilize, and Micron's guided 81% Q3 gross margin may represent peak levels in the near term [7]. - Goldman Sachs projects DRAM and NAND bit supply growth of just over 20% by 2026, with HBM revenue expected to grow significantly from a $35 billion total addressable market to over $100 billion by 2028 [4].