The Micron era is here! Melius initiates coverage with a Buy rating and a $700 price target; SanDisk surged nearly 30x in the 14 months following its spin-off.

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Melius Research analyst Ben Reitzes has initiated coverage on Micron and SanDisk with "Buy" ratings, setting two-year price targets of $700 and $1,350, respectively. He believes that AI data center demand for HBM and NAND is reshaping the semiconductor profit model, with memory manufacturers establishing a "reverse SaaS" profit structure through multi-year supply agreements. (Context: SK Hynix Q1 operating margin hits 72%, setting a record high for the semiconductor industry) (Background: GPU shortage repeats: Cloud providers tighten supply, AI startups face 32% price hikes and waitlists until year-end) As a hardware company that spun off from its parent firm just 14 months ago, its stock price has surged from $40 to over $1,000, an increase of nearly 30 times. This is not the valuation of an AI startup, but SanDisk, which is listed on Nasdaq. On April 27, Melius Research analyst Ben Reitzes initiated coverage on SanDisk and Micron with "Buy" ratings, setting two-year price targets of $1,350 and $700, respectively, representing 36% and 41% upside from current levels. Memory manufacturers' windfall Reitzes' core argument is not about individual stocks, but that the business model of the entire memory industry is being rewritten. In the past, DRAM and NAND prices fluctuated violently like commodities, and it was normal for manufacturers to earn for one year and lose for two. The situation is different now. Hyperscale cloud providers like Meta, Google, Microsoft, and Amazon are signing multi-year supply agreements with memory manufacturers, including price floors and prepayment arrangements, to lock in HBM and NAND capacity for the next 3 to 5 years. Reitzes describes this as "reverse SaaS." While traditional SaaS software companies are forced to shift from subscription models to usage-based billing, leading to margin compression, memory manufacturers are doing the opposite by locking in high margins with long-term contracts, significantly increasing revenue visibility. For these manufacturers, this means upgrading from "cyclical stocks dependent on market conditions" to "high-visibility stocks with long-term contract moats." The Big Three race to build HBM production lines Driving this transformation is the bottomless demand for HBM (High Bandwidth Memory) from AI GPUs. Over 95% of global DRAM capacity is controlled by Samsung, SK Hynix, and Micron. The three companies have already shifted approximately 23% of their wafer capacity from general-purpose DRAM to HBM production. SK Hynix holds about 62% of the HBM market share, with 90% of its output supplied directly to Nvidia. HBM3E prices have risen by nearly 20% this year, and HBM4 is set to enter mass production in the second half. The direct consequence is a severe shortage of general-purpose memory, with consumer DDR5 prices doubling since the beginning of 2025. AI has turned memory into a strategic resource that is "impossible to get even if you queue." Given the historical cyclicality of the memory industry, the fact that analysts are issuing two-year price targets is an implication in itself: this upward cycle may be longer than any in history.

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Published:2026-04-28 06:46:07

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