Micron Technology Faces Margin Pressure After Shift to DRAM From NAND Business, UBS Says

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Micron Technology Faces Margin Pressure After Shift to DRAM From NAND Business, UBS Says

, MT Newswires - 9:22 AM ET 3/21/2025 Company News

09:22 AM EDT, 03/21/2025 (MT Newswires) -- Micron Technology ( MU ) is facing margin pressures as it transitions from the NAND business to the high-bandwidth memory, or HBM, segment to serve the growing AI industry, UBS analysts said in a Friday note.

The analysts said that Micron Technology ( MU ) is working on a structural overhaul to reduce almost 10% of its NAND capacity as it prioritizes the DRAM segment for better margins on sustained demand for AI workloads. The brokerage expects margins to stabilize in fiscal year 2026 as revenue from the HBM segment picks up.

UBS modeled 12% quarter-on-quarter growth in the DRAM segment for Q3 and 5% for the NAND business.

The analysts said, "We expect DRAM to make up for the entirety of the overall Q/Q revenue increase due to higher HBM shipments - as MU raised

overall industry TAM but maintained its overall share target - and continued growth in DC."

UBS reiterated its buy rating on Micron Technology ( MU ) and maintained its 12-month stock price target of $130 per share.

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