Micron Is on an Epic Run. Don’t Fear the Memory-Chip Cycle.
By Adam Clark
Updated Feb 06, 2026, 10:52 am EST / Original Feb 06, 2026, 10:51 am EST
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Micron shares are up more than 30% this year so far. (Dreamstime)
Key Points
About This Summary
- Micron Technology shares have quadrupled in the past 12 months due to high demand for memory chips in artificial intelligence hardware.
- UBS analysts project memory supply shortages will extend into 2027, with DRAM undersupplied through the fourth quarter of 2027.
- UBS raised Micron’s target price to $450 from $400, citing strong AI data center demand offsetting potential headwinds.
MU+3.08% has been on a stellar run amid a shortage of memory chips but the question is whether it will last. Analysts at UBS expect the supply crunch will continue long enough to justify more gains from here.
Micron shares were down 0.2% at $381.96 in early trading. The stock has more than quadrupled in the past 12 months as demand for memory chips for artificial-intelligence hardware has driven prices up across its products.
Micron competes with South Korea’s Samsung Electronics
005930+4.92% and SK Hynix000660+5.72% in dynamic random-access memory, or DRAM, which is used in desktop computers and servers, and NAND flash memory found in smartphones and solid-state hard drives.
As Barron’s has warned, memory-chip suppliers have in the past built too much capacity during the upswing of a semiconductor cycle, leading to sharp crashes. But UBS analyst Timothy Arcuri sees no risk of that in the near future.
“Our industry conversations now point to memory supply shortages extending deeper into 2027—with DRAM potentially remaining undersupplied through C4Q27 [the fourth quarter of 2027] and NAND until C1Q27 [the first quarter of 2027],” Arcuri wrote in a research note.
Acuri raised his target price on Micron stock to $450 from $400 previously, reiterating a Buy rating.
Potential reasons for skepticism on Micron’s run lasting are that device manufacturers grappling with high prices for components might scale back their memory-chip requirements. Alternatively higher prices could reduce demand for smartphones and personal computers. But Arcuri argues that demand for memory-chips in AI data centers will more than offset those headwinds.
Another concern is whether Micron can compete with its Korean rivals in supplying high-bandwidth memory, the crucial type of chip which is needed for processors from the likes of Nvidia. Again it’s not a worry for Arcuri.
“All major AI accelerator vendors [are] converging on a full three-supplier sourcing strategy rather than, in some cases, relying heavily on only two suppliers,” the UBS analyst wrote.
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Write to Adam Clark at adam.clark@barrons.com
Qualcomm and Arm Stocks Drop. The Memory Crunch Is the Problem.
Updated Feb 05, 2026, 10:03 am EST / Original Feb 05, 2026, 9:04 am EST
Qualcomm cited the memory-chip shortage as one of the reasons for its weak guidance. (Photograph by Pau Barrena/Bloomberg)
Key Points
About This Summary
- Qualcomm’s shares dropped 11% due to weak guidance for the March quarter, attributed to rising memory prices affecting its handset segment.
- Arm Holdings’ American depositary receipts fell 4% following a forecast of decelerating revenue growth, with concerns over memory prices.
- Counterpoint Research projects a 7% decline in shipments of smartphone systems on a chip this year.
Qualcomm and Arm Holdings were sinking early Thursday as the surging memory-chip prices that are hurting the smartphone market threaten their prospects.
Qualcomm is a specialist in chips for mobile phones, while Arm’s semiconductor designs are ubiquitous in the smartphone market. While both are trying to diversify, they remain vulnerable to trends in the handset industry.
Unfortunately for them, memory prices have taken off in response to demand linked to artificial intelligence. That is set to crimp demand for smartphones and the processors inside them this year. Phone manufacturers are scaling back their production plans, especially at the lower end of the market.
Counterpoint Research projects that shipments of smartphone systems on a chip, or SoCs, the bundles of microprocessors and other components that power various phone functions, will fall 7% this year.
Qualcomm issued weak financial guidance when it published its earnings report after the market closed on Wednesday, citing the memory-chip shortage as a challenge. Shares were down 9.8% at $134.31 in early trading Thursday.
“[Qualcomm’s] December-quarter results exceeded expectations, but were offset by softer-than-expected March-quarter guidance, driven by headwinds from raising memory prices,” wrote Raymond James analyst Melissa Fairbanks in a research note. “We expect this uncertainty will remain an overhang on the stock, masking otherwise positive momentum in non-Mobile initiatives, including Auto, IoT, and longer term opportunities within the datacenter, and remain on the sidelines.”
Fairbanks has a Market Perform rating on Qualcomm shares. She noted Qualcomm’s guidance implies a 23% quarter-on-quarter decline in its QCT handset segment for its current quarter, saying that would be worse than the normal seasonal dip.
Mizuho analyst Vijay Rakesh lowered his target price on Qualcomm shares to $140 from $160, keeping a Neutral rating. The company’s handset revenue could fall again in the June quarter as a result of the memory-price crunch.
British semiconductor and software design company Arm has the same issue. Its American depositary receipts were up 0.3% at $105.46 in early trading, as investors digested a forecast of slowing revenue growth in its earnings report on Wednesday.
“The broader market concerns regarding heightened memory prices have caused Arm to just maintain its prior annual view for FY27 growth of both license & royalty revenue of about 20%, which would mark a deceleration from the 24% & 22% growth earned over the past two years,” wrote Benchmark Research analyst Cody Acree.
Arm said that even a 20% decline in global smartphone units would only translate into a 2%-4% drag on its smartphone royalties, due to a shift toward premium handsets that pay higher royalties for the company’s designs. However, Benchmark’s Acree noted that investors are worried over whether it can justify the stock’s “pronounced premium” to the broader AI-exposed semiconductor sector.
Arm stock trades at around 41 times the earnings per share expected over the coming 12 months. Acree rates Arm at Hold, with no target for the stock price.
Write to Adam Clark at adam.clark@barrons.com
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