Goldman Sachs Expects Another Strong Quarter From Micron

Goldman Sachs analysts believe Micron is on track to deliver another strong fiscal third quarter when the company reports earnings later this month. The investment bank has significantly increased its financial forecasts and price target, citing tightening supply conditions and rapidly growing demand for memory chips.

Micron shares climbed around 4% in premarket trading on Tuesday, extending their rebound following a broader semiconductor sector sell-off that was sparked by Broadcom’s weaker-than-expected quarterly results last week.

Goldman Raises Forecasts for Micron

Goldman Sachs increased its 12-month price target for Micron to $900 from $400. The bank also raised its revenue and non-GAAP earnings per share (EPS) estimates by an average of 28% and 36% for fiscal years 2026 and 2027, reflecting stronger pricing trends and improving demand across the memory chip industry.

Despite the more optimistic outlook, Goldman maintained its Neutral rating on Micron stock.

Analysts led by James Schneider expect Micron to exceed Wall Street expectations during the upcoming quarter. The team forecasts revenue of $37.6 billion, gross margins of 83.4%, and earnings per share of $22.07. These figures are well above current consensus estimates of $34.4 billion in revenue, 81.9% gross margins, and EPS of $19.74.

Strong Outlook for the August Quarter

Goldman Sachs is also forecasting stronger-than-expected results for the August quarter. The bank projects revenue of $48.8 billion, significantly higher than the current Wall Street consensus estimate of $40.4 billion.

Looking further ahead, Goldman’s full-year fiscal 2026 forecasts remain substantially above market expectations, with revenue estimates sitting approximately 30% higher and EPS projections around 36% above the broader analyst consensus.

Tight Supply Continues to Support Memory Prices

According to Goldman Sachs, one of the key drivers behind its bullish forecasts is the continued tightness in the memory chip market. Supply constraints and strong demand are expected to remain in place throughout 2027, supporting higher prices and stronger profit margins across the industry.

The analysts noted that these favorable market conditions should continue benefiting memory manufacturers, including Micron, as pricing power remains elevated.

Strategic Customer Agreements Remain a Key Focus

Goldman expects investors to pay close attention to Micron’s Strategic Customer Agreements (SCAs). These long-term contracts allow major customers to secure memory chip supply commitments and may also include pricing agreements that provide improved revenue visibility for Micron.

The bank believes investor sentiment remains highly positive following Micron’s significant share price appreciation and growing optimism surrounding the long-term benefits of these customer agreements.

High-Bandwidth Memory Could Drive Additional Growth

Another important area of focus is Micron’s position in the high-bandwidth memory (HBM) market. Analysts expect the company to maintain or potentially expand its roughly 20% market share in HBM, while conventional DRAM pricing could provide an additional boost to earnings.

Goldman highlighted three major factors that could influence Micron’s stock performance during its upcoming earnings call:

• Additional details regarding the scope and pricing structure of Strategic Customer Agreements.
• Management commentary on the sustainability of current DRAM pricing trends.
• Updates on Micron’s HBM roadmap, particularly the company’s next-generation HBM4 products and their potential to gain market share.

As demand for advanced memory solutions continues to grow, investors will be closely monitoring Micron’s outlook and management commentary for further signs that the current industry upcycle still has room to run.