Written by: Rita

Micron's third-quarter NAND contract price increase has fallen from the expected 28% to around 20%. UBS acknowledged short-term pricing noise in its research report on August 10. However, DRAM is tighter than previously expected, with HBM4 and HBM4E pricing continuing to exceed expectations. NVIDIA has downgraded the HBM specifications for VR300 due to supply constraints. UBS estimates the total HBM consumption in 2027 will instead rise from 58.7 billion Gb to 61.5 billion Gb, and the year-over-year increase in HBM mixed average price has been adjusted from 67% to 79%. UBS maintains a buy rating with a target price of 1625 dollars, corresponding to about 11 times the expected earnings per share in 2029. UBS believes Micron's profitability is undergoing a structural reset, with cumulative free cash flow likely to exceed 450 billion dollars by 2028.

HBM supply is tight, specification downgrades increase consumption

Pricing for HBM4 and HBM4E continues to strengthen, exceeding UBS's previous expectations. Due to supply constraints, NVIDIA has adjusted the HBM specifications for VR300, with the first version using 384GB HBM4 (8-Hi×24Gb×8×2) and subsequent versions upgraded to 512GB HBM4E (8-Hi×32Gb×8×2), lower than the previously expected 768GB. However, UBS believes that after the specification downgrade, overall HBM consumption in 2027 will rise from 58.7 billion Gb to 61.5 billion Gb. The HBM capacity per GPU is decreasing, but the number of available chips is increasing, leading to an overall rise in consumption.

UBS estimates that the industry's mixed average price for HBM will increase year-over-year by about 79% in 2027, higher than the previously predicted 67%. The price of a single HBM4E chip could surpass 530 dollars. Micron's HBM revenue in 2027 is expected to reach 26.35 billion dollars, a year-over-year increase of 134.6%, with ASP rising from 20.03 dollars per Gb to 28.48 dollars. The overall ASP for DRAM is expected to rise by 84.3% year-over-year in 2027, with an additional 15.5% increase expected in 2028. For DDR DRAM, UBS maintains its judgment of a quarter-over-quarter contract price increase of about 20% in the third quarter. CXMT's capacity expansion has been fully accounted for in models, with the supply impact being controllable. The tight supply situation for DRAM is expected to last at least until the second quarter of 2028.

NAND slows in the short term, supply improvements extend the cycle

NAND is the main variable in this adjustment. The third-quarter NAND contract price increase has been revised down from an expected 28% to about 20%, and Micron's own NAND ASP quarter-over-quarter increase has decreased from 35% to 23%. UBS's judgment is that the pricing pace is slowing, not a collapse in demand. Enterprise-level SSD demand remains strong, largely offsetting weakness in the consumer and PC sectors. UBS has instead raised its forecasts for NAND bit demand growth from 20% in 2026 and 23% in 2027 to 23% and 26%, respectively.

A structural change has occurred on the supply side. UBS's supply chain check shows that Yangtze Memory Technologies is shifting a significant portion of its incremental capacity to DRAM (annualized about 30,000 wafers/month, accounting for two-thirds of a total capacity increase of 450,000 wafers/month), rather than continuing to expand NAND. This will extend the pricing cycle for NAND. UBS expects NAND prices to peak in the fourth quarter of 2027, with industry NAND revenue in 2026 estimated at about 300 billion dollars, rising to 495 billion dollars in 2027.

Structural reset in profitability, FCF will exceed 450 billion

Micron's earnings per share forecasts for 2026, 2027, and 2028 are 74.13 dollars, 184.89 dollars, and 265.65 dollars, respectively, all significantly above market consensus. Earnings per share in 2029 are expected to remain above 190 dollars. UBS believes this is not a brief peak at the top of the cycle; a structural reset in profitability is occurring. The coverage of long-term agreements is changing Micron's profit structure, and cumulative free cash flow is expected to exceed 450 billion dollars by 2028.

UBS's target price is 1625 dollars, corresponding to about 11 times the expected earnings per share in 2029, yielding an implied price-to-earnings ratio of about 11 times when rolled back to 2028, consistent with Micron's three-year historical average. At the current stock price of 877 dollars, this implies about 85% upside potential. The tension in DRAM has exceeded expectations, HBM pricing continues to strengthen, and the short-term slowdown in NAND is offset by strong enterprise-level SSD demand and changes on the supply side. Micron's profit trajectory is shifting from a cyclical peak to a structural high position, and long-term agreements are changing the market's pricing approach to the storage cycle.

Disclaimer

This article is a compilation and interpretation of the third-party brokerage report (UBS, August 10, 2026) by Trend Research, combined with public market information. The ratings, target prices, earnings forecasts, and related judgments quoted in the article are the views of the brokerage analysts and represent the positions of their respective institutions, which do not represent the views of Trend Research and do not constitute any investment advice.

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