Micron poised for structural earnings reset as HBM supply squeeze tightens and Nvidia expands qualified memory suppliers beyond SK Hynix.

Micron Technology Inc (NASDAQ:MU)'s earnings power looks headed for a structural reset, according to UBS, which pointed to memory supply constraints so acute that Nvidia was forced to reduce the high bandwidth memory specifications of its upcoming VR300 GPU.

UBS said Nvidia scaled back the amount of HBM in each VR300 GPU due to tight supply, cutting planned content to 512GB of HBM4E per chip from an originally planned 768GB. The VR300 is part of Nvidia's upcoming Rubin Ultra lineup of AI accelerators. The reduced memory specification allows Nvidia to build more GPUs with the same constrained memory supply. UBS estimates this supply-driven strategy will boost VR300 shipments significantly, lifting its overall 2027 HBM consumption estimate to 61.5 billion gigabits from a prior 58.7 billion.

The bank also highlighted a re-widening price premium between HBM and DDR DRAM, a trend it has been tracking since April. UBS now models 2027 industry blended HBM average selling price up approximately 79% year over year, compared with its prior estimate of 67%, with HBM4E likely to reach more than $30 per gigabyte.

On NAND, UBS said third-quarter contract pricing continues to trend positively as server and storage SSD demand offsets weakness in smartphones and PCs, though the magnitude of quarterly price increases is tracking modestly below prior expectations. The bank raised its NAND industry bit demand growth forecasts to 23% for 2026 and 26% for 2027, and now forecasts industry NAND revenue of approximately $300 billion in 2026 and $495 billion in 2027.

For Micron specifically, UBS adjusted its earnings per share estimates for fiscal 2026, 2027 and 2028 to $74.13, $184.89 and $265.65 respectively, estimates the bank said remain well above consensus. UBS said its projections reflect Micron EPS staying above $160 in 2029 and the company generating more than $450 billion in cumulative free cash flow through 2028.

UBS maintained its $1,625 price target, based on approximately 11 times its estimated 2029 earnings per share of about $165, discounted back one year.