Micron Technology (MU) stock plunged nearly 6% on Thursday. It closed near $850. The drop erased billions in market capitalization in a single afternoon, but the sudden sell-off wasn’t an internal failure. It was a reaction to Taiwan Semiconductor Manufacturing Co. (TSMC).
TSMC unexpectedly raised its 2026 capital expenditure forecast to a ceiling of $64 billion. That number immediately spooked the market regarding escalating infrastructure costs across the entire chip sector. And yet, Wall Street remains aggressively bullish on Micron. The semiconductor manufacturer is still up more than 200% year-to-date and nearly 700% over the past year.
Melius Research analyst Ben Reitzes recently issued a Street-high price target of $2,200 for MU. That implies an upside of over 140% from current levels.
Investors are currently balancing two distinct pressures. First is the TSMC spending panic. Second is the news that Chinese memory competitor CXMT is advancing an $8.55 billion initial public offering. That upcoming IPO is raising fears of a future memory market oversupply.
But Micron’s underlying financials tell a different story. The company reported fiscal third-quarter revenue of $41.46 billion. High-bandwidth memory (HBM) and data-center storage shortages are completely dictating the enterprise market right now.
To hit the $2,200 mark, Micron has to prove its business is no longer trapped in a purely cyclical loop. Reitzes points to expanding gross margins, which have climbed to 85% on the back of premium AI memory sales. The foundation of this bull case relies on 16 new strategic customer agreements.
Those contracts lock in over $22 billion in committed revenue. They also secure Micron a primary supplier role and a co-investment partnership with AI lab Anthropic.
Why $22 Billion in Locked Contracts Shields Micron From Sector Panic
Historically, memory manufacturers like Micron, SK Hynix, and Samsung Electronics lived or died on a brutal boom-and-bust cycle. When fabrication capacity expanded, prices crashed.
TSMC’s $60 to $64 billion capital expenditure warning suggests the industry is entering another era of extreme spending. SK Hynix and Samsung are also aggressively expanding their own fabrication lines to meet immediate AI infrastructure demand. Normally, this level of sector-wide spending guarantees a future market glut.
Micron’s 16 strategic agreements change the math. By locking in Anthropic and major cloud providers with $22 billion in committed revenue, Micron insulates its 85% gross margins from future spot-market crashes. The company is securing guaranteed, long-term pricing for high-bandwidth memory rather than relying on short-term hardware sales.