Micron (MU) stock is rising significantly on January 2 after a senior Bernstein analyst, Stacy Rasgon, issued a constructive note in its favor.
Today’s rally took the MU Short-Term Relative Strength Index (9-day) into the mid-70s, which is often interpreted as overbought territory.
Including today’s earnings, Micron stock is trading at nearly five times its April 2025 price.
Stacy Rasgon expects MU stock to rise primarily because she sees “the largest bullish price cycle in the memory sector” ahead.
According to him, demand for DRAM driven by artificial intelligence (AI) will materially exceed supply, driving prices to record levels in 2026.
On Friday, the Bernstein analyst maintained his “outperform” rating on the semiconductor company and raised his price target to $330, indicating a possible upside of another 16% from its previous close.
A 0.15% dividend yield and billions in authorized share buybacks make Micron Technology even more attractive as a long-term holding.
Note that MU handily beat Street estimates in its most recent quarter reported on December 17.
Bernstein expects DRAM prices to increase by up to 25% in the first quarter of 2026.
Last month, Micron’s revenue guidance for its fiscal second quarter ending February 26 surpassed the consensus estimate by a staggering $4.5 billion, reinforcing Rasgon’s view of expected price increases.
Most importantly, despite its meteoric rebound, Micron stock is currently trading at a forward earnings multiple of less than 10 times, which is super cheap for a company riding the AI ​​tailwinds.
Furthermore, MU currently sits decisively above its major moving averages (50-day, 100-day, 200-day), suggesting that the bulls remain in complete control on multiple time frames.
An exciting combination of strong fundamentals and an exceptionally attractive valuation keeps Wall Street analysts positive on Micron stock over the next 12 months.
According to Barchart, the consensus rating on MU stock remains at “Strong Buy” with price targets reaching as high as $500, indicating potential upside of a whopping 60% from current levels.