Micron Technology Overweight Rating Affirmed on DRAM Pullback and 81% Margins
Analyst Joseph Moore keeps an Overweight rating on Micron Technology, arguing recent DRAM price pullbacks reflect profit taking rather than demand erosion. He highlights AI-driven memory shortages as AI consumes over 50% of semiconductor spending, supports gross margins near 81%, and underpins strong free cash flow prospects.
1. Morgan Stanley Maintains Overweight Rating
Analyst Joseph Moore reaffirmed an Overweight rating on Micron Technology and SanDisk, arguing recent share pullbacks reflect healthy pricing in of normal cycle peaks rather than a drop in underlying demand.
2. DRAM Pricing and Profit Taking
Moore pointed to flat DRAM spot pricing alongside rising capital expenditures and productivity gains, noting these traditional cycle-peak signals have triggered profit taking without indicating a fundamental demand decline.
3. AI Drives Memory Demand and Margins
The analysis highlights AI applications now account for over 50% of semiconductor spending, making memory a critical bottleneck, with customers prepaying for large deals, supporting gross margins near 81% and robust free cash flow generation.