Investing.com -- Analysts at Goldman Sachs expect Micron to deliver a strong fiscal third quarter when the company reports later this month, with the bank sharply raising its estimates and price target on the back of tightening supply conditions and surging demand for memory chips.

Shares in the memory chipmaker rose about 4% in premarket trading on Tuesday, poised to extend their recovery from a recent semiconductor sector sell-off triggered by Broadcom’s disappointing quarterly results last week.

The Wall Street firm raised its 12-month price target on Micron to $900 from $400, while lifting its revenue and non-GAAP EPS estimates by 28% and 36% on average for 2026 and 2027 to reflect stronger industry pricing trends and demand upside. It maintained its Neutral rating on the stock.

Analysts led by James Schneider expect Micron to deliver roughly 9% upside to Street revenue in the quarter, forecasting revenue, gross margin and EPS of $37.6 billion, 83.4% and $22.07, respectively, compared with consensus estimates of $34.4 billion, 81.9% and $19.74.

For the August quarter guidance, the bank’s forecasts stand well above Street expectations as well, with projected revenue of $48.8 billion against consensus of $40.4 billion. For full-year 2026, Goldman’s revenue and EPS estimates sit 30% and 36% above the Street.

The analysts said ongoing market tightness is the primary driver, with tight supply and demand conditions expected to persist throughout 2027, resulting in increased pricing and margins across the industry.

"We expect tight conditions to persist throughout CY27 and to result in increased pricing and margins for the industry," the analysts wrote.

Goldman expects investor attention to remain focused on Micron’s Strategic Customer Agreements (SCAs), long-term contracts between the chipmaker and its major customers that lock in supply commitments and potentially include pricing guarantees, providing revenue visibility for the company.

“We believe investor positioning remains very bullish given the dramatic share price run-up and optimism around the potential impact of long-term customer agreements,” the analysts said.

They also said investors expect Micron to maintain or expand its roughly 20% share in high-bandwidth memory (HBM), with conventional DRAM pricing providing additional upside.

The analysts flagged three items that could move the stock on the call, including further details on the scope and pricing terms of SCAs, commentary on the sustainability of current DRAM pricing trends, and updates on Micron’s HBM roadmap, including whether it can gain share with its next-generation HBM4 product.