Micron stock skyrockets nearly 10%: what’s driving AI memory re-rating

Micron stock (NASDAQ: MU) jumped almost 10% on Friday, propelled by a perfect storm of supply scarcity, record earnings momentum, and aggressive Wall Street re-ratings.

The stock surge reflects Wall Street’s conviction that Micron has entered a structural era of pricing power and margin expansion tied to AI infrastructure buildout.

In early trading, the memory chipmaker touched its highest levels yet, signaling that the semiconductor cycle has fundamentally shifted.

Guidance and HBM squeeze: Why Micron’s numbers matter

The catalyst for today’s rally traces back to Micron’s December 17 fiscal first-quarter earnings, which obliterated expectations and sent shockwaves through the Street.

The company reported earnings per share of $4.78 against expectations of $3.94, a 21% beat.

Revenue came in at $13.6 billion, crushing the $12.8 billion consensus estimate.

More critically, Micron’s second-quarter guidance signaled even stronger momentum: the company projects revenue of $18.7 billion with earnings per share between $8.22 and $8.62, figures that dwarf analyst estimates.​

The real story, however, lies in supply.

Micron revealed that its entire High-Bandwidth Memory (HBM) capacity for calendar 2026 is already sold out.

CEO Sanjay Mehrotra stated on the earnings call that the company can only meet about 50–67% of customer demand because HBM production is so constrained.

This structural shortage translates directly to pricing power: Bernstein models suggest DRAM average selling prices will sustain 20–25% quarter-over-quarter increases throughout the first half of 2026.

With gross margins surging to 56.8% in Q1 (up 11% points sequentially), Micron stock is capturing exceptional profitability from both HBM and traditional memory.​

Micron stock: Positioning that magnifies rallies

Today’s 10% move amplified beyond fundamentals through a confluence of market mechanics.

Bernstein SocGen Group issued a dramatic upgrade on Friday morning, raising its price target from $270 to $330, a $60 jump that forced a reassessment among portfolio managers.

The firm’s analyst Mark Li cited a “structural reset” in memory pricing and models for Micron’s fiscal 2026 EPS in the $32–$40 range, implying nearly 300% year-over-year growth.

This wasn’t the only voice shifting bullish; the rally prompted multiple analyst reviews across Wall Street.​

The sector momentum added fuel.

Samsung Electronics and SK Hynix, Micron’s chief competitors, also rallied on January 2, with Samsung hitting all-time highs on investor enthusiasm for its HBM4 progress.

These peer moves validated the thesis that the entire memory space benefits from AI capex runaway.​

Short interest also mattered. Micron carried approximately 25.15 million shares short (about 2.24% of the float), with only 1.21 days to cover at the recent trading volume.

While Micron’s short base is modest, any repricing higher squeezes covering, which accelerates rallies in the early morning hours when volume is lighter and liquidity is tighter.​

As capex cycles extend and new fab capacity remains years away, Micron’s sold-out status through 2026 is the ultimate vote of confidence in its pricing power.

Investors are effectively betting that this “higher for longer” memory market persists through mid-2026, underpinning a multi-year re-rating.

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