Key Takeaways:
- Citi added Micron to its 90-day upside watchlist on DRAM price outlook
- Citi placed Qualcomm on downside watch due to weak smartphone sales
- AWS raised GPU prices 20% as AI compute demand still exceeds supply
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Micron climbs 3% as Citi turns bullish on memory, bearish on Qualcomm
Citi added Micron Technology to its upside watchlist and placed Qualcomm on downside watch, citing diverging DRAM and smartphone outlooks.
"DRAM prices are expected to rise in the second half of 2026, driven by persistent AI demand," Citi analysts wrote in a note Monday. "Smartphone sales growth remains weak, pressuring Qualcomm's near-term outlook."
Micron shares rose 3% to $1,008.77 in early trading. The stock is among memory names rebounding after a Thursday selloff, supported by a wave of bullish analyst notes. UBS lifted its DDR contract-pricing forecasts to 32% quarter over quarter in Q3 2026 from 17%, and Bank of America reiterated a buy rating on Micron with a $1,550 price target.
The diverging calls come as AI compute demand continues to outstrip supply. AWS recently raised EC2 GPU prices by 20%, a sign that DRAM shortages remain the primary bottleneck in AI infrastructure, according to Citi. Memory now accounts for 35% to 40% of cloud AI capital expenditure, yet memory stocks trade at less than 10 times forward earnings, Bank of America data shows.
Citi's move adds to a growing consensus that the memory cycle has further to run. UBS analyst Nicolas Gaudois said the DRAM market will remain undersupplied until at least the second quarter of 2028, calling last week's pullback "likely temporary." Micron's fiscal third-quarter revenue reached $41.5 billion, up 346% from a year earlier, with non-GAAP gross margin at 84.9%. The company guided for $50 billion in fourth-quarter revenue.
Qualcomm faces a different set of headwinds. The smartphone market, which accounts for a majority of its revenue, has shown signs of saturation, with global handset shipments growing at their slowest pace in years. Citi's downside watch suggests the risk-reward has turned unfavorable for the mobile chipmaker.
Not everyone shares the bullish view on memory. "Big Short" investor Michael Burry recently disclosed a short position in Micron on a valuation thesis, sitting opposite Bank of America's view that the selloff was "a healthy reset, not a structural change in AI demand." SanDisk and Western Digital also joined the rebound, with SanDisk up 5% and Western Digital gaining 5% in early trading.
For Micron holders, the Citi call reinforces a bullish thesis built on AI-driven memory demand. The next test is Samsung's earnings report Tuesday, which will provide a read on high-bandwidth memory pricing across the industry. For Qualcomm, investors will watch for signs of smartphone demand stabilization in the coming quarters.
This article is for informational purposes only and does not constitute investment advice.
[1] Micron, Qualcomm in focus as Citi puts upside, downside catalyst watch on pair[2] SanDisk Rebounds 5%, Western Digital Gains 5%, Micron Climbs 3% as UBS, Citi, BofA Turn Bullish on Memory[3] Micron At $1,750 Is Now My Base Case[4] SanDisk Rebounds 5%, Western Digital Gains 5%, Micron Climbs 3% as UBS, Citi, BofA Turn Bullish on Memory - 24/7 Wall St.
