Analyst raises target prices for memory stocks due to strengthening pricing trends

Investing.com - Susquehanna analyst Mehdi Hosseini has raised the target prices and expectations for several memory stocks ahead of Micron Technology’s upcoming second-quarter earnings report, citing a strengthening pricing trend in the sector and improving demand dynamics.

Hosseini has increased forecasts and target prices for multiple memory chip manufacturers, including Micron Technology, Samsung Electronics, SanDisk, and SK Hynix, as both DRAM and NAND memory prices are higher than previously expected.

Track the latest analyst stock ratings with InvestingPro.

The analyst’s top picks are Samsung Electronics and SanDisk, due to “renewed momentum in memory/contract manufacturing” and “workload-driven support for higher cache content,” respectively.

Hosseini stated that the updated model now incorporates a stronger pricing trend in the memory market. He wrote, “The average selling prices of DRAM and NAND have significantly exceeded our January expectations so far this quarter,” and added that this trend is expected to continue into the second quarter of 2026.

Hosseini has raised Micron Technology’s target price from $345 to $525 while maintaining a positive rating. The target price for Samsung Electronics has also been increased from 235,000 KRW to 275,000 KRW, and SK Hynix’s target price from 1,000,000 KRW to 1,050,000 KRW. He maintains a positive outlook on Micron, Samsung, and SanDisk, and a neutral rating on SK Hynix.

The analyst pointed out that this year, the price trends of various memory products have diverged. He expects the average selling price of DRAM to outperform NAND in the first half of 2026 but underperform in the second half.

Looking further ahead, Hosseini said that shifts in AI workloads could impact future memory demand. He believes that as AI investments shift toward inference workloads, HBM4 may represent the peak in mixed DRAM pricing and margins.

Meanwhile, he sees additional demand driven by AI-related storage needs. Hosseini stated, “NAND demand related to KV caches—supported by the broader shift of AI toward inference—will be incremental, potentially adding over 10% upside to total NAND bit demand.”

The analyst also emphasized that investments in manufacturing capacity are increasing in the memory industry. “The construction of new memory cleanroom facilities has accelerated significantly, with additional wafer capacity expected to come online from early to mid-2027, which will help achieve a more balanced supply and demand environment by mid-2027.”

Hosseini highlighted that the management team’s execution, especially their ability to maintain profit margins throughout the cycle, will remain crucial for valuations that have been contracting since the end of 2025.

This article was translated with the assistance of artificial intelligence. For more information, please see our Terms of Use.