Micron Technology reported substantial growth in its first quarter of fiscal year 2026, generating $13.64 billion in revenue, reflecting a remarkable 57% increase compared to the previous year. The company’s non-GAAP earnings per share (EPS) of $4.78 surpassed analysts’ expectations by 21%. In light of this strong performance, Citi has maintained a Buy rating on the stock but has revised its price target from $510 to $425, citing temporary weaknesses in the DRAM spot market rather than any fundamental deterioration in Micron’s business.
Currently, Micron’s stock is trading at $321.80, reflecting a significant 20% decline over the past week. This drop has been attributed to concerns regarding TurboQuant, a new memory compression technology that some fear could diminish demand for memory products. However, Citi remains optimistic, arguing that such technological advancements often lead to increased demand rather than a reduction. The firm asserts that historical patterns in the semiconductor industry support their view of TurboQuant as a potential growth driver.
Despite these recent challenges, the broader analyst community continues to support Micron. Among the 43 analysts who cover the stock, 38 maintain a Buy rating, while only 2 have a Sell rating. The consensus price target stands at $527.60, indicating that Citi’s revised target is still below the market average, suggesting a cautious outlook in the near term.
The decline in Micron’s stock price coincides with a 6% fall in mainstream DDR5 16GB DRAM prices since the earnings report was released. Nevertheless, the company’s fundamentals remain strong, with the second quarter guidance forecasting revenue of $18.70 billion and EPS of $8.42, indicating ongoing momentum in the memory market. CEO Sanjay Mehrotra highlighted that the demand-supply gap in the DRAM sector is at an all-time high, reinforcing confidence in Micron’s growth potential.
Moreover, current valuation metrics, with a forward price-to-earnings (P/E) ratio of 7.63 and a price/earnings growth (PEG) ratio of 0.259, suggest the stock is poised for considerable upside, even after the target adjustment. The commentary from retail investors on platforms like Reddit has shifted from overwhelmingly bullish post-earnings to a more neutral stance, indicating heightened caution among traders.
Citi emphasizes that the selloff linked to TurboQuant appears to be an overreaction to cyclical data, believing the prevailing risks are temporary. In summary, while Micron faces some near-term headwinds, its ongoing revenue growth and robust market position suggest that the fundamental thesis remains intact, positioning the company for future success.
