JPMorgan has reiterated its Overweight rating and $1,540 price target on Micron Technology (NASDAQ: MU) ahead of the company's September 30 earnings report, believing the August-quarter results are likely to exceed market expectations across the board, while memory chip supply and demand remain tight and prices still have room to move higher.

JPMorgan expects Micron's August-quarter revenue, gross margin, and earnings per share to all surpass consensus estimates of $51.4 billion, 86.2%, and $31.73, respectively. Although management previously noted that the pace of price increases had slowed somewhat, JPMorgan views this as more a reflection of the company actively adjusting its sales strategy rather than any weakening in end demand.

Slower price gains do not signal weaker demand

JPMorgan believes the recent moderation in Micron's price increases is mainly because the company wants to maintain customer relationships and lock in future demand in advance through long-term supply and capacity agreements. In other words, the company is using the current tight supply-and-demand environment to sell more of its capacity ahead of time via medium- and long-term contracts, rather than simply chasing short-term spot price gains.

JPMorgan estimates that roughly 35% of Micron's future bit output may already be covered by supply and capacity agreements. By comparison, the company disclosed in the previous quarter that DRAM agreement coverage was about 20% and NAND about 33%. This means visibility into Micron's future capacity is improving further, reducing the impact of subsequent price-cycle volatility on revenue.

Memory supply shortage expected to persist through 2027

JPMorgan believes the current supply-demand gap in the memory industry has not yet eased significantly, with the shortage expected to last throughout 2027 and possibly extend into 2028. Against this backdrop, DRAM and NAND prices still carry an upward bias. Even if the pace of price increases has slowed from earlier levels, as long as supply continues to lag demand, the overall pricing environment will remain supportive for Micron.

Therefore, JPMorgan does not treat the recent slowdown in price momentum as a signal that the cycle has peaked, but rather sees the market gradually shifting from a phase of rapid price increases toward a reallocation of scarce capacity through long-term agreements.

HBM4 ramp continues to support growth

High-bandwidth memory remains an important driver of Micron's future growth. JPMorgan said Micron had already shipped more than $1 billion cumulatively of HBM4 products as of the May quarter, and as capacity continues to ramp, the HBM business is expected to expand further in the coming quarters. At the same time, overall demand signals from customers have continued to strengthen recently.

JPMorgan noted that Micron management currently judges the supply-demand environment in 2027 may be even tighter than in 2026, which means the company still holds strong bargaining power in pricing, capacity allocation, and long-term contract negotiations. Based on stronger customer demand and the continued HBM4 ramp, JPMorgan expects Micron management may also raise its November-quarter guidance during this earnings report.

Earnings focus shifts to whether guidance can be raised further

As a result, the key focus of this earnings report is not only whether the August quarter can beat expectations, but also whether Micron will further raise expectations for future quarters. From JPMorgan's perspective, three factors are currently supporting Micron's performance: persistently tight memory chip supply, a higher coverage ratio from long-term supply agreements, and HBM4 entering an accelerated ramp phase. As long as these factors do not change materially, Micron's earnings and pricing environment are still expected to remain strong. Based on this view, JPMorgan continues to maintain its $1,540 price target and Overweight rating.