Micron Technology shares rose 1.6% on Monday as investors assessed whether structural changes in the memory market could reduce the company's historically high earnings volatility. Micron has more than tripled this year and trades at just above six times forward earnings, making it one of the cheapest stocks in the S&P 500, behind only Charter Communications and General Motors, according to CNBC. The discount has traditionally reflected the cyclical nature of the memory industry, but artificial intelligence demand for high-bandwidth memory (HBM) may be changing that dynamic.
Nvidia's latest earnings highlighted the current pricing environment, with CFO Colette Kress telling analysts the company was experiencing "extreme pricing conditions in memory" as component costs increased significantly. Micron is one of three major HBM suppliers for AI systems. Despite an initial 3% gain after Nvidia's results, Micron shares reversed and closed lower that session. D.A. Davidson analyst Gil Luria attributed part of the move to a broader trading unwind involving semiconductor and software positions.
Long-term customer agreements could reduce Micron's downside. These contracts include binding volume commitments, take-or-pay provisions and, in many cases, price floors, generally extending through 2030. Micron has said that once planned agreements are completed, roughly half or more of its revenue should be covered. Management has said minimum prices in price-band contracts would imply gross margins "well above" Micron's peak quarterly margins in previous memory cycles.
Mizuho lowered its Micron price target to $1,300 from $1,375, citing multiple compression across the semiconductor sector, but maintained a bullish fundamental view. The firm noted "aggregate DRAM demand continues to grow" and that market de-specification was a response to tight DRAM supply. Mizuho also maintained an Outperform rating on SanDisk, lowering its price target to $1,875 from $1,900 and expecting SanDisk's earnings per share to increase fivefold between fiscal 2026 and 2028. The firm estimated SanDisk could use $30 billion to $50 billion of aggregate free cash flow between 2027 and 2028 to repurchase 25% to 30% of the company.
In South Korea, SK Hynix rebounded about 1.9% to 1.706 million won on Tuesday after falling roughly 9% over the past month. Foreign investors sold about 5.98 trillion won of SK Hynix shares during that period. HBM export prices hit a record $76.13 per unit, while conventional DRAM export prices jumped 24.3% in July. The concern is increasingly about who captures those profits.
Samsung Electronics is becoming a credible HBM4 alternative. LS Securities estimates HBM4's share of Samsung's HBM shipments rose from about 5% in the first quarter to roughly 35% in the second, while its blended HBM yield improved by more than five percentage points. Analyst Jung Woo-sung told Seoul Economic Daily the change "does not mean growth in the HBM market is slowing," but represents a "normalisation of competition among suppliers." That matters because big technology customers generally prefer several qualified suppliers to reduce supply risk and strengthen bargaining power.
LS Securities cut its SK Hynix target price by 27.3% to 2.4 million won from 3.3 million won, maintaining a buy rating. It also lowered its forecast for HBM operating margins next year to about 60% from roughly 80%. The brokerage said HBM accounts for more than twice as much of SK Hynix's intrinsic value as it does for Samsung under its estimates. Bank of America believes global DRAM revenue growth could exceed 80% in 2027 if AI demand keeps expanding, while UBS expects SK Hynix to retain the largest share of HBM bit shipments this year at about 48% before Samsung moves ahead next year with roughly 41% versus SK Hynix's 39%.
