The volatile semiconductor rally got another boost this week when UBS analyst Timothy Arcuri raised his price target on Micron Technology Inc. NASDAQ: MU to a staggering $1625, nearly three times its previous target.
The stock was trading below $800 at the time of the update, so the new target represents an upside of more than 100% and a company value of more than 1.8 trillion.
MU shares rose nearly 20% the next day, and the rest of the industry seems to be joining in, such as the iShares PHLX Semiconductor ETF. NASDAQ: SOXX 6% faster.
When the entire industry seems to be converging every day, it’s easy for the wrong companies to catch on and rise to new all-time highs. But it’s also important to remember Warren Buffett’s words about what happens when the tide goes out: you find out who was swimming without the right clothes.
Why UBS Raised Its MU Price by 200%
Arcuri’s May 26 MU price hike reflected his view that high-bandwidth memory (HBM) is undergoing a fundamental shift from a cyclical semiconductor business to one driven by long-term AI infrastructure demand.
Instead of a cyclical manufacturing plant, HBM now has the foundations for structural growth led by two key factors:
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Long Term Income Visibility: AI hyperscalers are tapping into the HBM backlog and are more than willing to close long-term supply agreements and access to next-generation products. Micron already has agreements in place for all of its 2026 HBM offerings.
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Concentrated Supply Chain: Mass production of HBM products is a skill currently held by only three companies: Micron, Samsung Electronics Ltd. OTCMKTS: SSNLFand SK Hynix. In its Q1 2026 earnings report, Micron projects that HBM’s data center demand will exceed $100 billion by 2028, which is three times the $35 billion in HBM data center sales by 2025.
Given these secure, long-term contracts and heavy supply concentration, Arcuri says MU shares are worthy of a valuation similar to NVIDIA Corp. NASDAQ: NVDA. However, the stock trades at less than 10x earnings at the time of the call—much cheaper than the NASDAQ 100’s average of 24x earnings, hence the large re-rating.
3 Stocks Rallying in Sympathy: Hype or Substance?
Many tech stocks in the AI and semiconductor space rallied heavily, notably Western Digital Corp. NASDAQ: WDCRambus Inc. NASDAQ: RMSand with me NASDAQ: ON. But are these benefits worth it? Despite the industry’s excitement, each company still needs a lot of diligence to separate the substance from the hype.
Western Digital: A Clean Addition to Micron’s Operation
Western Digital Today
Western Digital
- 52 week interval
- $51.17
▼
$553.50
- Dividend Yield
- 0.09%
- The P/E ratio
- 31.71
- Target Value
- $413.50
Western Digital Corp also gained 8% on the day of the report, making its year-to-date (YTD) gain more than 200%.
Western Digital is now a pure hard disk drive (HDD) manufacturer following the SanDisk spinoff, and the same concept that UBS used for Micron’s HBM products also applies to Western Digital HDDs.
Hyperscalers are locked into long-term contracts, and the company’s production capacity throughout 2026 has been calculated. The Q3 2026 earnings report on April 30th confirmed the bull’s thesis with a big double-digit beat showing revenue growth of 45% year-over-year (YOY) and total revenue of more than 50%.
Several technical fundamentals are supporting a long rally in WDC shares. It has strong support at the 50-day moving average, which has traded above the 200-day moving average for over a year. A bearish crossover in the Moving Average Convergence Divergence (MACD) indicator halted the rally, but now the bullish reversal seems to be continuing as the stock is making new all-time highs.
Rambus: Logical Enterprise License Required for Data Centers
Rambus Today
- 52 week interval
- $52.12
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$161.80
- The P/E ratio
- 70.44
- Target Value
- $130.43
Rambus is a classic “picks and shovels” game on a memory storage theme.
The company develops memory-interface systems that allow the GPU and memory stack to communicate within a large data center, and licenses them as IP.
High-margin licensed products that can be sold regardless of which memory company wins the design provide a consistent, recurring revenue stream.
Additionally, the company’s HBM4E Memory Controller, introduced in April, is now the fastest in the industry. The stock is up more than 60% YTD but remains undervalued among peers in the AI space.
RMBS shares have been more volatile than WDC, but volatility is often the price investors pay for higher leverage. The stock spent two months stuck in neutral, bouncing between the 50- and 200-day moving averages as the Relative Strength Index (RSI) remained in bearish territory.
However, the April rally sent the price above the 50-day moving average, and the momentum stopped when the RSI crossed above 50 and entered bullish range. The 50-day moving average now appears to be a support, which bodes well for future upside opportunities.
onsemi: A Rally for Compassion for Nothing
today
- 52 week interval
- $41.49
▼
$129.13
- The P/E ratio
- 87.75
- Target Value
- $92.00
onsemi also made 9% on the day of the Micron report, but the UBS thesis doesn’t really apply here.
The company has traditionally made chips for the automotive and industrial markets, which are cyclical and not tied closely to the broader AI space.
onsemi has some data center business, but it accounts for only a small portion of the company’s total revenue. For example, the $797 million in Q1 automotive revenue was more than half of the company’s Q1 2026 net sales.
Management expects data center revenue to double YOY through 2026, but that’s still $500 million on a projected revenue base of more than $6 billion.
While the company has its own compelling bullish vision, it remains outside the Micron paradigm. And the nearly 90% gain over the past three months makes the stock look frothy. The price is now above the trend line, and the MACD indicates that the bullish trend is losing momentum. It could be a good time to make a profit in ON shares.
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