BofA Raises $MU Price Target to $125 from $110, Maintains Buy Rating

Analyst Comments: "Despite increasing macro (softer PC, phone demand) headwinds, MU was able to deliver beat/raise results on the back of solid data center demand, including continued growth in its AI-levered high-bandwidth memory (HBM) sales. Further, management reiterated their call for a record FY25E, raised HBM market TAM to $25bn+ from $20bn with strong pricing/share visibility."

"The critical metric of gross margins for FQ4/Q1 was also well above expectations at 36.5%/39.5% vs. cons at 34.6%/37.8%. While we expect a softer FQ2 on seasonality, overall we raise FY25E/26E by 22%/31% to $7.18/$9.87 and raise PO to $125 from $110 on higher 2.5x CY25E P/B vs 2.2x earlier, on the back of stronger earnings growth and multi-year increase in estimates, but still within its 0.8x-3.1x historical range."

"We forecast $4bn in CY25 HBM sales implying about 16% overall share, with upside to 20%+ share or $5bn if HBM remains a two-vendor race between MU and Hynix. MU data center strength a positive read-across for NVDA, AVGO, MRVL, AMD and KLAC/semicaps."