Why BofA Thinks Micron Stock Could Be One of AI’s Biggest Long-Term Winners

Micron Technology (MU) once again reminded Wall Street why it remains one of the biggest beneficiaries of the artificial intelligence (AI) boom. After concerns emerged that China's new open-weight AI model, Kimi K3, could curb AI infrastructure spending, Bank of America reached the opposite conclusion. 

Earlier this week, the firm reiterated its “Buy” rating and $1,550 price target on Micron stock, arguing that more efficient AI models could actually drive substantially higher demand for high-bandwidth memory (HBM), DDR5, and NAND storage. The bank sees roughly 65% potential upside from current levels. BofA believes Micron could be one of the biggest long-term winners of the next phase of the AI boom.

BofA also believes open-weight AI could dramatically expand Micron's addressable market by shifting infrastructure ownership beyond a handful of hyperscalers to thousands of enterprises running AI models on their own hardware.

The Valuation Still Looks Attractive

Despite its enormous rally of 736% over the past year, Micron still trades at a valuation that looks reasonable compared with many semiconductor peers.

MU stock trades at roughly 21.5 times trailing earnings and only about 13.1 times forward earnings, well below broader semiconductor averages. Investors appear to remain cautious because memory has traditionally been a cyclical business, but current AI-driven demand and constrained supply suggest this cycle may prove stronger than previous ones.

If Micron continues delivering record earnings while maintaining disciplined capital spending, today's valuation could still leave room for additional upside.

AI Demand Is Transforming Micron's Business

Memory chips have historically been one of the most cyclical areas of the semiconductor industry. Unlike processors, DRAM and NAND products are largely commodities, meaning supply and demand typically determine pricing.

Today, however, AI is changing that equation. HBM, DRAM, and enterprise SSDs have become critical components inside AI servers, creating demand that continues to outpace industry supply. Micron has become one of only a handful of companies capable of supplying these advanced memory products at scale, putting it in a strong competitive position as AI infrastructure spending accelerates.

Micron's Results Show the AI Boom Is Still Going Strong

Micron's financials continue to show extraordinary results. Fiscal third-quarter revenue climbed to a record $41.46 billion, rising 346% year-over-year (YOY), while adjusted EPS jumped to $25.11 from $1.91 a year earlier, easily exceeding analyst expectations. Operating cash flow reached $25.39 billion, while free cash flow climbed to a record $18.3 billion.

Management also issued another strong forecast, expecting approximately $50 billion in Q4 revenue and non-GAAP EPS of around $31, indicating demand remains robust despite concerns that AI spending could slow.

Outside its quarterly performance, Micron has continued strengthening its business by signing long-term strategic customer agreements related to the automotive industry with companies like Ford (F), General Motors (GM), Qualcomm (QCOM), Denso (DNZOY), Harman, and Visteon (VC). These contracts improve revenue visibility while helping customers secure future memory supply.

Wall Street Still Sees More Upside Ahead

Bank of America analyst Vivek Arya recently reiterated a “Buy” rating and lifted confidence in Micron's long-term outlook, arguing that open-source AI models actually increase memory demand because each enterprise deploying those models requires its own computing infrastructure. The firm also believes the expiration of CHIPS Act buyback restrictions later this year could create another positive catalyst.

Other analysts remain equally constructive. KeyBanc, TD Cowen, Bernstein, and Citigroup all maintain bullish ratings, citing continued pricing strength for DRAM and HBM products as well as tight industry supply.

Overall, Micron carries a “Strong Buy” consensus rating with an average price target of roughly $1,495, implying meaningful potential upside of 60% if AI-driven demand continues at its current pace.