Memory market outlook dims as Citi warns of peak pricing cycle for Micron and rivals

Shares of Micron declined after Citi downgraded its price target amid signals that the current DRAM and NAND pricing cycle may be nearing its peak, with supply expansions and fierce competition from Chinese manufacturers adding to market caution.

Micron shares fell on Friday after Citi cut its price target on the memory chip maker and warned that the current pricing cycle in DRAM and NAND may be nearing its high point. According to the blockonomi report, the stock slipped more than 1.8% and has lost about 9% over the past month, even after a powerful run over the last year. Citi kept a Buy rating on Micron but reduced its valuation multiple and said it now expects earnings growth to reflect softer market conditions.

Citi’s analysts said the change followed discussions with industry participants at the Future of Memory and Storage conference, where the message was that pricing remains firm but the pace of improvement is slowing. Investing.com reported that the bank also pointed to a recent 6% drop in mainstream DDR5 16GB DRAM prices, while still arguing that AI-related demand and long-term contracts with hyperscalers should help support contract pricing. The revised outlook also trimmed Citi’s earnings estimates for fiscal 2027 and 2028.

The bank now expects DRAM and NAND prices to peak in the second quarter of 2027 before easing. It forecast a 3% half-on-half decline in DRAM and a 5% fall in NAND in the second half of 2027, while also saying Micron’s gross margin could move down from the mid-80% range to the mid-70% area over the following year. Citi said roughly 40% of Micron’s DRAM volume is under long-term contracts, which should soften but not eliminate the pressure.

Supply growth is also adding caution. Reuters-style coverage from Tom’s Hardware reported that SK Hynix approved 54.3 trillion won, or about $38.15 billion, in fresh capital spending in South Korea, part of a broader national push with Samsung to expand memory manufacturing. At the same time, Citi identified China’s YMTC and CXMT as the most serious long-term threat, saying their capacity expansion could weigh on prices, including in markets such as European data centres.