Micron Technology (MU) newly signed long-term customer agreements are emerging as a key source of margin support and downside protection as the memory upcycle extends into 2027, RBC Capital Market said Wednesday in a report.
The 16 strategic contracts, covering roughly a quarter of Micron's revenue, include pricing floors that help protect profitability even if demand softens, the report said.
The agreements span portions of Micron's output in DRAM, the working memory inside computers and servers, and NAND, the storage memory used in solid-state drives and phones, the report said. The take-or-pay structure and minimum-revenue commitments reduce downside risk, RBC said.
Rising production of HBM, the high-bandwidth memory used in AI accelerators, is driving strong momentum for Micron, with HBM revenue already above $1 billion and market share topping 20%, the report said.
The firm expects DRAM pricing to keep climbing through 2027 as AI demand remains robust, RBC said. NAND pricing is also benefiting from firm conditions, though some moderation may emerge as the high base and contract structures settle in, the report said.
RBC raised its price target on Micron stock to $1,500 from $1,200 and maintained its outperform rating.
On Thursday, Micron reported fiscal Q3 results and Q4 guidance that exceeded consensus forecasts.
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