Susquehanna has increased its price target on Micron Technology to $2,000 from $1,750, placing it at the top of Wall Street estimates, after the memory chipmaker reported an exceptional fiscal third-quarter performance and issued guidance well above consensus expectations.
Micron posted quarterly revenue of $41.46 billion and adjusted earnings per share of $25.11, materially outperforming consensus figures of $35.91 billion in revenue and $20.86 in adjusted EPS. The company also delivered a gross margin of 84.9%, surpassing the 80.8% analysts had anticipated.
Looking ahead, Micron guided the current quarter to revenue of around $50 billion and adjusted EPS near $31, again comfortably ahead of analyst models. Susquehanna attributed its target increase largely to the structure and scale of Micron's newly signed strategic customer agreements.
Micron has signed 16 strategic customer agreements - non-cancellable, take-or-pay contracts that typically run for five years - a set of deals Susquehanna views as a structural change in how Micron will monetize its products. Those agreements cover roughly one-fifth of DRAM bits and one-third of NAND bits today. Micron expects that, when the contracts are fully executed, more than half of total revenues will be subject to such arrangements.
Crucially, the SCAs contain price floors that Susquehanna says lock in gross margins above prior-cycle peaks even if the market softens. Based on those terms and the company's outlook, Susquehanna now projects Micron could generate free cash flow in excess of $110 billion in fiscal 2027 (FY27), with a significant portion of that cash expected to return to shareholders.
On the product and revenue mix, Micron's DRAM revenue rose to $31.3 billion, more than tripling year-on-year. The company said its HBM4 product is ramping at twice the pace of the prior generation, and that customer commitments for HBM extend into 2028 and beyond. NAND revenue nearly quadrupled to $9.9 billion, with data centre solid-state drive revenue topping $5 billion in the quarter alone.
Micron also now expects the total addressable market for HBM to surpass $100 billion in 2027, a timeline accelerated by one year relative to prior company expectations. Susquehanna, which already maintained estimates well above street consensus, raised those estimates further and now projects that Micron's annualised EPS could potentially reach $200 as the company exits FY27.
This set of results and contractual commitments prompted Susquehanna to be more bullish on Micron's medium-term earnings and cash generation profile. The firm emphasized the combination of high current margins, multi-year binding customer contracts with price protections, and accelerated product ramps as the underpinning for its revised forecasts.