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Written by Rich Smith for The Motley Fool->
Wall Street banker Bernstein spooked the market yesterday with worries over spot demand for computer memory.
The banker still thinks Micron is a buy, however, and may soon raise its price target.
Micron (NASDAQ: MU) stock took a tumble Thursday, falling 3% on a report from Bernstein highlighting trouble in the computer memory spot market.
On Friday, shares of the popular computer memory-maker bounced 9.3% through 10:30 a.m. ET -- Bernstein may be behind this movement, too.
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Bernstein warned yesterday of a shortage of both DRAM and NAND flash computer memory. There's not enough supply to meet demand for all the artificial intelligence chips that Nvidia (NASDAQ: NVDA), AMD (NASDAQ: AMD), and others are churning out. Customers are bidding against one another and driving prices higher.
That sounds like good news for Micron, which makes both NAND and DRAM. However, prices have gotten so high that "OEMs & module houses [are being forced to] reduce their purchases." Near term, this could cause price hikes to "decelerate notably" into Q2 2026, potentially slowing Micron's profit growth.
That's the bad news; here's the good: DRAM prices soared 57% in April versus average prices in Q1. NAND prices rose 65% to 70%, according to Bernstein. So even if some buyers are forced to curtail purchases in Q2, those who have the money to spend will continue buying memory, driving "major" increases in both DRAM and NAND in Q2 2026, currently underway.
Long story short, while it's uncertain what the future may hold medium or long term, in the near term at least, analyst forecasts for Micron to earn nearly $19 a share in the May quarter, and to grow sales 260% to $33.5 billion, should be safe.
And here's a prediction for you: Last I checked, Bernstein had a $510 price target on Micron. Given its bullish outlook and buy rating, though, I expect a price target hike sooner rather than later.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Micron Technology, and Nvidia. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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