Driven by surging demand for AI computing power and persistent supply constraints, the memory industry is entering a rare period of super-cyclical prosperity and profit reassessment. In a report dated May 18th, Citigroup analyst Atif Malik significantly raised the price target for Micron Technology from $425 to $840, nearly doubling it, while maintaining a "Buy" rating. The core rationale for this upward revision is that the DRAM super-cycle is accelerating into a phase of price elasticity release. The report highlights that supply for High Bandwidth Memory (HBM) remains tight, with pricing expected to have further upside in 2027. Since producing HBM consumes 3 to 4 times the wafer capacity of standard DRAM, the ongoing expansion of HBM production will crowd out supply for standard DRAM, subsequently pushing its prices higher. Regarding the specific timing of price increases, Samsung led with hikes in Q1 2026, while Micron plans to follow with an approximately 40% increase in Q2 2026. Based on the upward price trend, Citigroup also raised its profit forecasts for Micron: the core Earnings Per Share (EPS) for fiscal year 2026 was increased by about 10% to $58.46, and further raised to $104.56 for fiscal year 2027. The new $840 price target is anchored at approximately 8 times the expected EPS for 2027. The wave of DRAM price increases is accelerating, with Micron following Samsung's lead. The current wave of DRAM price hikes is now in full swing. Samsung initiated the move with a 100% increase in Q1 2026, and Micron plans to follow suit in Q2 2026 with an approximately 40% increase. This round of price increases is primarily driven by a supply-demand gap in standard commercial DRAM (non-HBM). Silicon Systems sales outlook from equipment manufacturer Applied Materials indicates that the growth rate of DRAM bit supply is projected to be only around 30% by the end of 2026. This increment is still insufficient to meet the demand expansion from AI data centers in 2027, necessitating additional investment in new wafer capacity. Citigroup forecasts that the average price of DRAM will increase by approximately 200% year-over-year in 2026, while NAND prices are expected to rise about 186% year-over-year, further confirming that the memory industry is currently in a historically strong pricing cycle. HBM Supply Remains Constrained, 2027 Price Increase Expectations Heat Up The pricing outlook for HBM is a central component of the upward valuation revision for Micron. Producing HBM consumes approximately 3 to 4 times the wafer capacity required for standard DRAM. Currently, the profit margin gap between HBM and commercial memory is not yet sufficient to incentivize memory manufacturers to undertake large-scale capacity conversion or additions. Consequently, manufacturers are generally exercising restraint on the supply side, leading to persistently tight HBM supply. Under this supply-constrained environment, HBM pricing is expected to have further upside in 2027. Simultaneously, memory manufacturers are likely to continue practicing disciplined supply management to prevent AI data centers from reducing HBM procurement due to excessive costs. However, risks on the demand side should not be overlooked. Cisco has already reduced DRAM usage by 50% in over 20 product lines, including wireless products, due to pricing pressure. This case demonstrates that excessively high memory prices could dampen some end-demand, requiring memory manufacturers to balance the pace of price increases with maintaining demand. Price Target Significantly Raised, Valuation Anchored to Historical Uptrend Cycles Citigroup raised Micron's price target from $425 to $840, increasing the valuation multiple from 5x to 8x the expected EPS for 2027, citing the unprecedented pricing environment and robust AI demand. This valuation level aligns with Micron's historical trading range during previous DRAM upcycles. The report projects that Micron's core EPS for fiscal year 2027 will be $104.56, declining to $80.49 in fiscal year 2028, which already incorporates expectations for a cyclical pullback. Free cash flow for fiscal year 2027 is forecasted to reach $87.931 billion, with a free cash flow yield of approximately 10.6%.