Micron Technology Inc (NASDAQ:MU) shares fell more than 5% in Thursday morning trading after the memory chipmaker reported results and outlook that drew mixed reactions from analysts, who largely pointed to strong fundamentals but flagged near-term margin and pricing dynamics.

The stock move followed Micron Technology’s latest quarterly report released after Wednesday’s market close, which highlighted continued strength in demand tied to artificial intelligence but also guidance that some investors viewed as conservative relative to pricing trends.

Analysts at Bank of America reiterated a “Buy” rating and raised their price target to $500 from $400, citing what they described as a durable memory cycle extending into at least calendar 2027. They pointed to expanding long-term supply agreements, limited cleanroom capacity through 2027–2028, and the growing role of memory in AI-related “token economics” as key structural supports.

“Memory pricing could remain elevated for longer (albeit stabilize),” the firm wrote, highlighting a newly signed five-year strategic supply agreement and increasing visibility from multi-year contracts. Bank of America also lifted its earnings estimates for fiscal years 2026 through 2028 by as much as 70% to 100%.

However, the firm cautioned that spot prices in DRAM appear to be stabilizing and gross margins may be near peak levels, with Micron’s guidance implying a high point in the current cycle. It added that rising capital expenditures could benefit semiconductor equipment suppliers such as Applied Materials and Lam Research.

Analysts at Wedbush Securities also maintained a positive stance, reiterating an “Outperform” rating and raising their price target to $550. They argued that Micron’s results and guidance again reflect conservative assumptions relative to underlying pricing trends.

Wedbush noted that while the company delivered results ahead of prior expectations, investor expectations were already elevated following a strong run in the stock. The firm suggested this helped explain the muted market reaction despite what it characterized as a beat and raise.

The brokerage also pointed to industry checks indicating that pricing trends in both DRAM and NAND could be running ahead of management’s assumptions, with supply constraints expected to persist into 2026 and potentially beyond.

“Supply remains tight through 2026,” Wedbush noted, adding that the imbalance between supply and demand should continue to support pricing, even if the pace of increases moderates later in the year.

Meanwhile, analysts at Baird emphasized that demand continues to outpace supply, with Micron planning significant capital investments to expand capacity in response.

Baird said it expects DRAM bit growth across the industry to remain below end demand into 2027, reflecting structural limitations in expanding output. The firm also noted that DRAM capacity additions require greenfield investments rather than incremental node migrations, making supply growth slower to respond.

The brokerage pointed to Micron’s increasing capital expenditure plans, including spending above $25 billion in fiscal 2026 and further increases expected in fiscal 2027, as evidence of efforts to address long-term demand. It also highlighted artificial intelligence as a key driver, with data centers accounting for an increasing share of total memory demand.

Micron’s outlook comes amid broader industry commentary that AI-driven demand is reshaping memory markets, particularly through data center expansion and high-bandwidth memory requirements. Analysts broadly agree that constrained supply, combined with long lead times for new capacity, is limiting the industry’s ability to quickly respond to demand growth.

Still, near-term concerns around stabilizing spot prices and peak margins appear to be weighing on sentiment, contributing to Thursday’s share decline despite a generally constructive longer-term outlook from analysts.