Analysts at Baird raised their earnings estimates and price target for Micron Technology Inc (NASDAQ:MU), citing strong pricing momentum in the memory market and rising demand tied to artificial intelligence infrastructure.

The brokerage maintained an “Outperform” rating on the chipmaker and lifted its price target to $500 from $443.

Baird said DRAM pricing is expected to more than double quarter over quarter in the first calendar quarter, followed by another increase of more than 40% in the second quarter, reflecting tightening supply as demand for high-bandwidth memory (HBM) used in AI systems accelerates.

The analysts expect industry DRAM bit growth of about 25% in 2027, which they say will fall short of end demand given a sharp expansion in advanced chip packaging capacity. Capacity for chip-on-wafer-on-substrate technology is projected to grow about 60% year over year in 2027 after doubling in 2026.

“Notably, we expect the bulk of the new DRAM capacity will go to HBM,” Baird analysts wrote. “This suggests ongoing pressures in PC and smartphone units in 2027, in our view.”

Demand for HBM is expected to strengthen as next-generation AI processors require significantly larger memory stacks. Upcoming systems from companies such as Nvidia and Google are expected to increase the number of HBM chips used per processor, the analysts said.

HBM is forecast to account for roughly 11% of total DRAM production in 2026, while data centers are expected to represent about 53% of overall DRAM demand. Hyperscale cloud companies are also expected to build inventory during the year.

Among hyperscalers, Microsoft and Amazon are each projected to consume about 16% to 17% of hyperscaler-dedicated DRAM supply in 2026, followed by Google and Nvidia at roughly 12% each. Meta Platforms and Oracle are also expected to account for a meaningful share.

Server DRAM demand is forecast to grow from about 38% of total DRAM demand in 2025 to around 46% in 2026, with the portion tied to AI workloads rising from 16% to 26% over the same period.

Baird said strong pricing should also lift profitability across the memory sector. Server DDR5 gross margins, which exited 2025 at around 70%, are expected to approach 90% by the end of 2026, averaging about 85% for the year. NAND flash margins are projected to rise to around 70% in the second quarter and finish the year in the high-70% range.

Reflecting the improved outlook, Baird now models earnings per share of about $60 for fiscal 2026 and $100 for fiscal 2027 for Micron Technology.