MU Stock Could See ‘Sizable’ Multiple Expansion, RBC Says Citing AI-Driven Memory Demand

According to RBC Capital, Micron trades at roughly 6.5 times expected forward earnings, which gives limited credit to its Strategic Customer Agreements and floor pricing agreements.

• RBC Capital analyst Srini Pajjuri reiterated an ‘Outperform’ rating and $1,500 price target on Micron.
• The firm expects AI demand, particularly from more memory-intensive agentic AI applications, to continue outpacing memory supply.
• HBM growth, limited clean-room capacity and tight EUV availability are creating structural constraints on memory supply, according to RBC.

Micron Technology (MU) shares are trading at a valuation that RBC Capital said barely reflects the company’s exposure to the AI-driven memory boom, leaving room for “sizable” multiple expansion, in a note to investors on Friday.

According to TheFly, RBC Capital analyst Srini Pajjuri reiterated an ‘Outperform’ rating and a $1,500 price target on Micron, citing the growing memory requirements of AI workloads, including the shift toward more memory-intensive agentic AI applications.

MU stock rose as much as 1.6% in morning trade, with retail sentiment on Stocktwits around the shares trending in ‘bearish’ territory over the past day. 

AI Demand Keeps Pressure On Memory Supply

RBC said memory demand remains ahead of available supply, with the imbalance supported by several structural constraints across the industry. Those include rapid growth in high-bandwidth memory (HBM), limited clean-room capacity and tight availability of extreme ultraviolet (EUV) equipment.

HBM has become increasingly important for AI accelerators due to its ability to deliver high memory bandwidth while meeting the processing demands of large AI workloads. 

The expansion of agentic AI, which involves AI systems operating with greater autonomy and handling multiple tasks, could further increase memory requirements, according to the analyst.

Valuation Barely Credits Strategic Deals

Despite the favorable supply-demand backdrop, Pajjuri said Micron’s valuation remains relatively modest.

The stock trades at roughly 6.5 times expected forward earnings, according to RBC. Pajjuri stated that this valuation gives limited credit to Micron’s Strategic Customer Agreements and floor pricing agreements.

RBC said the combination of sustained AI demand, structural supply constraints and customer agreements leaves room for a “sizable” expansion in Micron’s valuation multiple.

How Does The Rest Of Wall Street Feel About MU Stock?

MU stock has already gained over 235% year-to-date and over 500% in the last 12 months. Wall Street’s 12-month average price target for Micron stands at $1,513, according to Koyfin data, implying potential upside of over 50% from current levels.

Out of the 49 analysts covering the stock, 45 give Micron a ‘Strong Buy’ or ‘Buy’ rating, with only four analysts recommending ‘Hold.’

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