Micron Technology's (MU) AI-driven memory demand continues to outpace supply, supporting a potentially extended DRAM upcycle, RBC Capital Markets said.

The analysts said in a note Thursday that strong AI demand, especially the growing use of memory-intensive Agentic AI, is outpacing supply. Factors including strong demand for high-bandwidth memory, limited clean-room capacity, and tight Extreme Ultraviolet, or EUV, availability keep supply constrained.

The analysts added that they attribute recent concerns about customers reducing specifications mainly to tight supply rather than higher bill-of-materials costs.

The analysts said they expect revenue and non-GAAP earnings per share of $50 billion and $31.09. DRAM contract prices are on track to rise more than 20% quarter-over-quarter in calendar Q3, above their about 10% forecast.

For fiscal Q1, the analysts expect management's guidance to be 3% to 5% above consensus estimates of $56 billion and $34.85. Blended DRAM prices are expected to increase 5% to 10% in fiscal Q1, although SCA price ceilings could limit some of the upside.

RBC reiterated its outperform rating on Micron Technology, with a price target of $1,500.

Shares of Micron were up 1.8% in Friday trading.

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