Storage shares extend rally. Micron Technology’ shares jumped 6% in premarket after surpassing $1 trillion market cap on Tuesday. SanDisk, Roundhill Memory ETF, Western Digital, Seagate Tech, Rambus up around 2%.

The memory chip maker’s shares climbed 19.3% on Tuesday to an all-time closing high of $895.88, and to push the company above a $1 trillion market capitalization for the first time, according to Dow Jones Market Data. That also made Micron the 10th largest U.S. company by market cap, as it passed both Walmart and Eli Lilly on Tuesday, the data showed.

Tuesday’s performance was the stock’s largest one-day gain since November 2011, and the $163 billion in market cap that it added is about the size of Charles Schwab, according to the data.

Compared with past offtake sales agreements that were based on volume, UBS analyst Timothy Arcuri said, “new ‘enhanced’ [long term agreements] now incorporate longer durations, fixed volume commitments and — most importantly — a partially fixed pricing framework.”

The AI-driven demand for memory chips has led to tightening supply, and up until recently, companies were more reluctant to add capacity out of fear of a slowdown in what is a normally cyclical industry. That has allowed memory companies to raise prices.

Arcuri said dynamic random-access memory will be in an undersupply position until at least the second quarter of 2028, and NAND memory will be undersupplied until the fourth quarter of 2027.

He more than tripled his price target for Micron’s stock to $1,625 from $535, with the new target representing upside of 81% from its closing price on Tuesday. That makes Arcuri by far the most bullish analyst on Micron’s stock, as two analysts are tied with the next highest target of $1,100, according to FactSet.

Arcuri’s price target is based on a 15x price-to-earnings multiple on a 12-month basis, and he added that he sees “no reason why [Micron] should trade a whole lot differently than [Nvidia] in terms of [price-to-earnings].” Nvidia trades at a P/E ratio of 21.4x, according to FactSet data.

Meanwhile, the new customer agreements for Micron likely span between three to five years, with some years under fixed terms and others up to variable pricing, Arcuri said in a Tuesday note. Up to 30% of double data rate, or DDR, memory volumes across the industry will likely be “locked in at pricing that is just slightly below current levels,” Arcuri noted, citing his supply-chain research.

Micron should be able to give up some of its near-term revenue for better visibility into customer demand and “a smoother earnings profile,” Arcuri said. He sees more upside for Micron from rising average sales prices for high-bandwidth memory.

A large swath of the memory industry has secured long-term agreements amid shortages, and Arcuri expects to keep Micron’s earnings per share above $100 next year through 2029. Analysts surveyed by FactSet are currently modeling EPS of $58.61 for the current fiscal year that runs through August, and EPS of $100.91 in the next fiscal year.

Additionally, Arcuri sees Micron generating more than $400 billion in free cash flow during that time.

“We believe the market will start to put a more ‘normal’ multiple on the stock and [Micron] will continue to re-rate higher as more details emerge about the structural changes AI has driven to the entire memory complex,” Arcuri said.

Micron’s stock has rocketed 213.9% in 2026, while the PHLX Semiconductor Index has rallied 81.8%, Nvidia shares have gained 15.2% and the S&P 500 index has advanced 9.8%.