HSBC raised its price target on Micron Technology (NASDAQ: MU) to $500 from $350 while maintaining a Buy rating, citing accelerating momentum in memory pricing and rising demand from AI inferencing platforms.

The firm noted that Micron's shares had climbed 92% over the past three months, significantly outperforming the Nasdaq, which gained just 1%, driven primarily by a faster-than-expected rally in DRAM prices. HSBC said that with inferencing platforms increasingly consuming storage capacity, NAND demand now represents the next potential catalyst for the stock.

The analysts highlighted that inferencing workloads are absorbing a substantial portion of server DRAM output, tightening supply and lifting overall memory prices. As a result, HSBC raised its fiscal second-quarter operating profit forecast by 6%, projecting operating profit of $12 billion, up 88% quarter over quarter, on sales of $20 billion, a 47% sequential increase. The firm now expects blended DRAM average selling prices to rise 45% quarter over quarter, compared with a prior estimate of 37%.

HSBC also pointed to incremental demand growth for server DRAM and enterprise solid-state drives used in token management, retrieval-augmented generation, and key-value caching, all of which are core components of AI inferencing. The resulting supply shortages, combined with lean DRAM inventories of roughly two to four weeks, were said to be pushing up pricing for PC and mobile DRAM as well.

The firm expects the supply tightness to persist through year-end, driving substantially stronger earnings growth in fiscal 2026. HSBC forecast operating profit of $51 billion for fiscal 2026, representing a 368% year-over-year increase, on sales of $84 billion, up 124%. The analysts also expect Micron to increase capital expenditures by 7% to expand DRAM capacity beginning in the second half of fiscal 2027, alongside higher dividend payouts with an anticipated payout ratio of 6%.