Micron Technology Inc. (NASDAQ:MU) has surged more than 260% this year, but one analyst says Wall Street still doesn’t understand the company.
Gil Luria of DA Davidson on Wednesday raised its price target from $2,100 to a Wall Street high of $3,000, implying an additional 176% upside.
“You have a deadline for how long you can be short this stock,” Luria told CNBC on Thursday.
Why December 9 is important
Luria pointed to Dec. 9 as the date restrictions related to Micron’s CHIPS Act financing agreements expire, allowing the company to increase stock repurchases.
Micron ended fiscal 2026 with $68.3 billion in net cash. Financial Director Marc Murphy told investors during Micron’s September earnings conference call that the company intends to return 100% of excess cash to shareholders over time, primarily through repurchases.
Management plans to seek additional repurchase authorization beyond the currently remaining $2.2 billion.
“Those are the worst things you can hear as a short seller,” Luria said.
Why Wall Street hasn’t caught up
Luria believes investors still view Micron as the cyclic memory maker of 2023, rather than a company whose products have become essential to artificial intelligence.
He said Micron was trading at about six times earnings, compared to 40 times or more for Advanced Micro Devices Inc. (NASDAQ:AMD) and Intel Corp. (NASDAQ:INTC).
“This is one of the biggest disruptions we’ve ever seen,” he said.
Luria also noted that Micron represents only 3% of the Nasdaq-100’s market capitalization, but could generate 10% of its profits over the next year, putting fund managers who are underweight the stock at risk of missing their benchmark.
His $3,000 target values Micron at about 19 times estimated fiscal 2027 earnings, reflecting his belief that investors will end up paying much more for its earnings.
“The stock has only risen on earnings growth. Multiple expansion has not happened yet,” Luria said.
He says memory has become critical to AI performance, while long-term customer agreements could make Micron’s profits more predictable.
Micron has signed 26 multi-year agreements covering more than 35% of its estimated revenue through 2030.
Luria’s case depends on whether the AI spending cycle holds up. On Polymarket, traders put about a 6% chance on a slowdown in the AI sector by December 31, a window covering the buyback date. The contract requires three of six triggers within 90 days, including conditions such as Nvidia shares closing 50% below their all-time high.
Micron shares fell about 2% on Thursday despite Samsung’s forecast for record profits, after gaining 4.1% on Wednesday.
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