Micron's EPS will exceed $100 in 2027! Barclays' "super double" forecast far exceeds the market consensus of $54

This earnings report and guidance have directly pushed the narrative of the "memory cycle" into a more aggressive range: revenue, gross margin, and cash flow are all rising simultaneously, forcing the market's valuation framework to shift upward. Barclays has raised its 2027 earnings per share forecast to triple digits, increasing the target price from $450 to $675, maintaining an Overweight rating; based on the closing price of $461.73 on March 18, this corresponds to an upside potential of about 46%.

Barclays analyst Tom O'Malley stated in the latest report that the revenue guidance provided by the company "is 42% higher than Wall Street's expectations, while the gross margin guidance is at 81%, this fundamentally changes our model, and we now expect EPS to exceed $100 in 2027." The Bloomberg consensus (obtained on March 18) for Micron's FY2027 EPS expectation is $54.81, highlighting a significant gap.

The core supporting this "super double" model is not a sudden comprehensive recovery on the demand side, but rather a tight supply side: Barclays believes that DRAM and NAND will remain in an extremely tight supply-demand situation until 2026. Management mentioned that key customers can only meet 50%-67% of their own needs in the medium term, making it more difficult for prices to adjust quickly.

This optimism does not shy away from headwinds: the company expects PC and smartphone shipments to decline in the low double digits in 2026. However, Barclays identifies the main theme as the faster consumption of memory by data centers and AI—three factors combined: HBM route, capital expenditure expansion, and the signing of a five-year strategic customer agreement, providing stronger visibility and higher profit leverage.

The numbers in the guidance triggered the "model reset"

In the February quarter, Micron's performance and pricing elasticity exceeded expectations: revenue of $2.39 billion (Wall Street expected $1.97 billion), adjusted gross margin of 74.9% (Wall Street 69.1%), EPS of $12.20 (Wall Street $9.00). DRAM revenue was $1.88 billion, and NAND revenue was $0.50 billion, both above consensus expectations.

What truly forced the market to recalculate was the guidance for the May quarter: revenue of $3.35 billion (Wall Street $2.37 billion), gross margin of 81.0% (Wall Street 72.4%), and operating expense guidance of $140 million, lower than the expected $151 million, corresponding to Barclays' estimated EPS of $19.15 (Wall Street $11.29).

Prices are still rising

Barclays attributes nearly all of this round of earnings upgrades to the combination of "strong pricing under tight supply + cost execution + product mix." The February quarter data provided direct evidence: DRAM shipments grew "in the mid-single digits" quarter-over-quarter, while ASP increased "in the mid-60%"; NAND shipments grew "in the low-single digits" quarter-over-quarter, with ASP rising "in the high 70%."

By the May quarter, Barclays continued to bet on ASP increases in its model: DRAM ASP increased by 34% quarter-over-quarter, and NAND ASP increased by 43%, provided that industry supply remains tight

"Customers can only meet 50%—67% of demand"

The most significant feedback from management in the report is that key customers can only meet 50%—67% of their own demand in the medium term. Barclays' conclusion is straightforward: the price environment will persist and will not peak rapidly within a single quarter.

Supply-side constraints are also more specific: DRAM supply growth is limited by cleanroom space, construction cycles, higher HBM conversion ratios, and a decrease in "bits that can be cut from each wafer"; NAND is similarly constrained by cleanroom space, with some suppliers redirecting cleanroom resources to DRAM.

HBM route has entered the delivery rhythm

Barclays considers the "increased AI memory content" as the main variable for navigating the cycle. The company disclosed that it has started shipping HBM4 12H 36GB (for NVIDIA's Vera Rubin platform) in the first quarter of 2026, while sampling HBM4 16H 48GB; HBM4E is under development, expected to ramp up in 2027.

When asked about Groq's LPU and its SRAM usage during the conference call, the company responded that its impact is "slightly additive": the evolution of AI forms will increase the HBM/DRAM content in standard racks rather than replace memory demand.

PC and mobile phone sales are declining, while data center share is rising

Management expects that PC and smartphone shipments will both decline in the low double digits in 2026. However, the volume on the data center side is increasing: the company expects that in 2026, the bit TAM for data center DRAM and NAND will exceed 50% of the total industry TAM for the first time; server shipments are expected to grow in the low single digits, with new platform introductions simultaneously driving an increase in DRAM content per machine.

Cash flow and capital expenditure are expanding in sync

Barclays emphasizes that this round is not about "squeezing profits with minimal investment." Management expects FQ3 cash flow to double sequentially (FQ2 was $5.5 billion), with Barclays estimating FQ3 cash flow at $13.7 billion and capex for the quarter at about $7 billion.

The direction of capital expenditure is also clearer: the company guides that FY26 net capex will exceed $25 billion (previously about $20 billion), with the increase mainly coming from cleanroom investments; total capex for FY27 will significantly ramp up, with construction-related capex expected to increase by over $10 billion year-on-year to support HBM and DRAM investments.

Five-year SCA and Tongluo expansion

The company announced the signing of its first five-year strategic customer agreement (SCA), which differs from the usual one-year LTA, aiming to enhance business stability and visibility; at the same time, it plans to start construction of a second cleanroom of equal scale at the Tongluo base (acquired from Powerchip) by the end of FY26 for DRAM.

Within Barclays' framework, these two matters equate to extending "good prices" from short-term prosperity to longer-term certainty.

Target price raised, valuation multiple lowered

Barclays raised the target price from $450 to $675 but simultaneously lowered the valuation multiple: the new target price is based on 6.3 times CY27 EPS of $106.77; the previous $450 corresponded to 11.1 times CY27 EPS of $40.46. The reason for the multiple downgrade is the expectation that the sequential price increase will begin to slow from here, but the earnings base has been significantly raised The gap in profitability itself is the conclusion: Barclays' adjusted EPS forecast for FY2027 is $102.53, far exceeding the Bloomberg consensus of $54.81; the FY2026 EPS forecast is $57.91, also higher than the consensus of $37.54.

Upside 800, Downside 400

The report provides clear scenario boundaries: the upside scenario is $800, based on a 7x CY27 EPS of $115 valuation, assuming HBM grows faster, pricing is stronger, and cost performance is better; the downside scenario is $400, based on a 4.7x CY27 EPS of $85 valuation, corresponding to weakening AI demand, aggressive supply-side expansion, and a longer-than-expected duration of price declines.

Barclays' betting point is not subtle: as long as supply tightness continues into 2026 and HBM is released at a steady pace, triple-digit EPS will no longer be a peak fantasy, but rather the main assumption they are willing to realize with their target price