Micron Technology, Inc. (NASDAQ:MU) stock traded lower Monday as investors weighed rising U.S. Treasury yields and higher crude oil prices ahead of the company's fiscal fourth-quarter earnings report on Sept. 30.

Other semiconductor stocks also traded lower.

Despite Monday's weakness, Micron continues to benefit from tight memory supply and AI-driven demand across DRAM, high-bandwidth memory and NAND, according to BMO analyst Harsh Kumar.

Micron shares have gained nearly 280% year to date. Kumar, who has an Outperform rating and a $1,300 price forecast, recently raised his estimates after memory pricing came in stronger than expected.

Memory Shortage Supports Pricing

Kumar described the current memory market as a "supercycle" that could extend well beyond the middle of next year.

He told CNBC on Saturday that one distributor estimated demand at roughly three times available supply. Meanwhile, manufacturers continue to struggle to add enough capacity.

Kumar expects supply and demand to remain out of balance throughout calendar 2027 and potentially into part of 2028.

Pricing increased across DRAM, HBM and NAND during the August quarter. Kumar said those gains exceeded his expectations and led him to raise his estimates.

Server DRAM, particularly DDR5, has emerged as the latest upside surprise. Kumar said agentic AI applications are driving server demand and increasing memory requirements.

HBM pricing is less responsive to short-term market moves because suppliers typically sell the product under contracts. DRAM, by contrast, is more exposed to market and spot pricing.

Kumar expects NAND flash to become the next major supply bottleneck and potentially see the largest price increases next year.

AI Demand Tightens Memory Supply

The current environment marks a sharp reversal from 2023, when Micron posted a negative 10% gross margin.

Kumar said rising HBM production is also reducing conventional DRAM availability because HBM requires roughly three times the die area. At the same time, aggressive AI infrastructure spending is absorbing more memory supply and supporting higher prices.

Adding capacity will not provide an immediate fix. Kumar said new fabrication facilities typically take two to three years to build and cost about $8 billion to $10 billion.

The first meaningful tranche of new capacity is expected around the middle of next year. Even then, Kumar expects the market to remain undersupplied.

Micron Earnings In Focus

Micron is scheduled to report fiscal fourth-quarter results on Sept. 30.

Wall Street expects earnings of $31.45 per share, up from $3.03 a year earlier. Revenue is expected to reach $50.75 billion, compared with $11.31 billion in the prior-year period.

Micron trades at a price-to-earnings ratio of about 24.5 times.

The stock carries a Buy consensus rating, with an average price forecast of $1,522.83.

Recent analyst actions include Rosenblatt maintaining a Buy rating and $1,500 target on Sept. 24. Wells Fargo maintained an Overweight rating and lowered its target to $1,400 on Sept. 23, while Citigroup maintained a Buy rating and raised its target to $1,300 the same day.

Top ETF Exposure

The iShares Semiconductor ETF (NASDAQ:SOXX) holds an 8.78% weighting in Micron. The Invesco PHLX Semiconductor ETF (NASDAQ:SOXQ) carries an 8.80% weighting, while the State Street SPDR NYSE Technology ETF (NYSE:XNTK) holds an 8.87% weighting.

Significant inflows or outflows from these funds can translate into buying or selling pressure on Micron shares.

Price Action

MU Stock Price Activity: Micron Technology shares were down 2.03% at $1,060.31 in premarket trading Monday, according to market data.