Micron Jumps 19% to Top $1 Trillion Market Value After UBS Triples Price Target

No Longer a Cyclical Company

UBS Upgrade Sparks Micron Surge

Micron Technology, the memory-chip maker, surged nearly 20% in New York trading on May 26, lifting its market value above $1 trillion. The rally followed UBS's decision to triple its price target on the stock, fueling investor enthusiasm.

Micron closed at $895.88, up 19.29% from the previous session. Its market capitalization was about $1.01 trillion at the close.

The main catalyst was UBS's increase in its Micron price target to $1,625 from $535. The bank said Micron has evolved from a typical cyclical company into a structurally high-profit business.

Until the early stages of the artificial intelligence industry's expansion, the memory-chip business was a classic cyclical sector. Supply and demand repeatedly fell out of balance, causing sharp swings in pricing. Chipmakers posted enormous profits in boom periods but often fell into losses during downturns.

That pattern is changing as competition to build AI infrastructure intensifies and memory-chip shortages deepen. Long-term supply agreements spanning three to five years have also been increasing recently.

Seo Sang-young, an executive director at Mirae Asset Securities, said UBS's view helped draw in FOMO-driven retail money. After Micron surged early in the session, hedge funds that had sold call options on the stock also rushed to buy shares to limit losses through delta hedging.

A call option gives the holder the right to buy the underlying asset at a predetermined price at a future date. Sellers of call options on Micron shares must deliver stock to buyers at expiration. As Micron's share price climbed, their losses mounted, prompting them to buy shares quickly.

Han Kyung-woo, Hankyung.com reporter case@hankyung.com