MU Stock Soars as Micron’s Revenue More Than Quadrupled in Q3

Micron (MU) stock is ripping higher on June 25 after the memory chip giant posted a blockbuster Q3, featuring a 346% year-over-year increase in revenue to $41.46 billion. 

As investors reacted to management’s impressive guidance for about a 20% sequential growth in the current quarter, MU’s relative strength index (RSI) soared into the mid-60s, signaling the stock is now approaching “overbought” territory.

Still, Citi analysts remain bullish as ever on Micron shares, which are already trading at about 4x their price at the start of this year. 

AI Demand Is Driving Micron Stock Higher

An insatiable demand for Micron’s high-bandwidth memory (HBM) chips that power artificial intelligence (AI) data centers drove its adjusted gross margins to a whopping 84.9% in fiscal Q3. 

More importantly, the company has secured 16 long-term Strategic Customer Agreements (SCAs), which have effectively “sold out” its 2026 manufacturing capacity. 

These multi-year take-or-pay deals lock in roughly $22 billion in cash deposits and commitments, de-risking Micron’s margin profile and offering immense visibility into future revenue. 

Management has also committed to returning 100% excess cash to shareholders moving forward, up from prior 50%, which makes MU shares even more attractive as a long-term holding. 

Citi Raises Price Target on MU Shares

In a post-earnings research note, Citi analysts led by Atif Malik maintained their “Buy” rating on Micron shares and raised their price target to $1,400. 

Malik is bullish on the firm’s SCAs, which are expected to drive some 40% of its revenue over the next five years. These contracts “create more trust in the DRAM industry vs the historical cyclers,” he told clients. 

Despite an explosive rally, MU is trading at a forward price-earnings (P/E) multiple of less than 18x currently. 

This makes it significantly cheaper to own than semiconductor peers, including Nvidia (NVDA) that’s going for about 23x at the time of writing. 

What’s the Consensus Rating on Micron?

Note that Citi is among the more conservative Wall Street firms on Micron Technology. 

The consensus rating on MU stock sits at “Strong Buy” currently, with price targets going as high as $1,750, signaling potential upside of another 45% from here.