Phillip Capital initiated coverage on Micron Technology with a Buy rating, citing a favorable environment for DRAM and high-bandwidth memory (HBM). The firm anticipates a severe shortage in memory chips, pushing DRAM prices to their highest levels since 2019. Demand for Micron's HBM products remains strong, with HBM chips already sold out for 2026. This positive outlook is driven by increased demand.

Industry supply constraints, combined with sustained investment in AI infrastructure, are contributing to pricing increases across DRAM. Micron's HBM3E products are integrated into Nvidia's Blackwell GPUs supporting strong revenue growth. Phillip Capital sees Micron's next-generation HBM4 as a potential share gainer. This is due to anticipated high per-pin speeds, particularly against competitors.

The broader memory market remains tight, with DRAM prices rising for eight consecutive quarters. Micron and SK Hynix have fully committed their HBM output for next year. While capital spending is expected to ease in 2026, the demand from hyperscalers like Amazon and Microsoft will support higher pricing. Micron's U.S. manufacturing footprint is advantageous, bolstered by CHIPS Act funding.

Phillip Capital set a $500 price target on Micron, based on fiscal 2026 earnings projections. This valuation is built on DRAM pricing strength, tight supply, and Micron's improving position in the HBM market. Investors should watch for further developments in the AI sector as it is driving demand for advanced memory solutions. This is key to Micron's continued success.