UBS Backs Micron Fundamentals Ahead of December Buyback Restart, Cautions on Momentum vs. Durability

UBS analyst Timothy Arcuri maintained an optimistic outlook on Micron Technology (MU), saying the memory chip supply-demand gap will widen into next year. He called the stock a "tug-of-war between momentum and durability." Arcuri expects Micron to supply about 60% of DRAM demand next year, with server DDR bit demand growing roughly 80% and server/storage SSD bit demand more than doubling by 2027. However, long-term supply agreements are beginning to cap revenue upside, shifting investor focus to demand durability and capital returns. Micron's stock buyback restriction, tied to 2022 CHIPS Act funding, is set to lift in December. Arcuri expects roughly $20 billion in repurchases during the December-February quarter, potentially rising to $40-50 billion per quarter thereafter. Micron reports earnings next week but may not detail buyback plans. Shares closed down 2.2% at $1,071.88 on Wednesday but are up 275% year-to-date. Wolfe Research's Chris Caso echoed the view, citing long-term agreements and capacity expansion as growth drivers.