AI Surge Drives Memory Chip Demand to New Heights
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Feb 18 2026
0mins
Should l Buy MU?
Source: Fool
- Surge in Capital Expenditure: In 2025, major tech companies like Amazon, Alphabet, Meta, and Microsoft are projected to spend $360 billion on capital expenditures, with expectations to rise to nearly $600 billion in 2026, indicating robust growth in AI demand that enhances market outlook for these firms.
- Memory Chip Shortage: A persistent shortage of high-bandwidth memory (HBM), DRAM, and NAND chips has led to soaring prices, and experts predict this shortage will continue into 2027, impacting operational costs and profitability for data centers reliant on these components.
- Micron Technology's Revenue Surge: Micron Technology reported record revenue of $13.6 billion in its fiscal 2026 first quarter, a 57% year-over-year increase, with adjusted earnings per share soaring to $4.78, reflecting its strong competitive position in the memory market amid rising demand.
- Optimistic Future Outlook: Micron anticipates second-quarter revenue of $18.7 billion, up 132% year-over-year, and adjusted EPS of $8.42, up 440%, highlighting the company's growth potential driven by AI, despite inherent cyclical risks in the memory market.
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Analyst Views on MU
Wall Street analysts forecast MU stock price to fall
26 Analyst Rating
24 Buy
2 Hold
0 Sell
Strong Buy
Current: 405.350
Low
235.00
Averages
336.12
High
500.00
Current: 405.350
Low
235.00
Averages
336.12
High
500.00
About MU
Micron Technology, Inc. provides memory and storage solutions. The Company delivers a portfolio of high-performance dynamic random-access memory (DRAM), NAND, and NOR memory and storage products through its Micron and Crucial brands. The Company's products enable advancing in artificial intelligence (AI) and compute-intensive applications. Its segments include Compute and Networking Business Unit (CNBU), Mobile Business Unit (MBU), Embedded Business Unit (EBU), and Storage Business Unit (SBU). CNBU segment includes memory products and solutions sold into the data center, PC, graphics, and networking markets. MBU segment includes memory and storage products sold into the smartphone and other mobile-device markets. EBU segment includes memory and storage products and solutions sold into the intelligent edge through the automotive, industrial, and consumer embedded markets. SBU segment includes SSDs and component-level storage solutions sold into the data center, PC, and consumer markets.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- S&P 500 Inclusion: Micron will officially join the S&P 500 index on March 23, attracting investor interest and potentially enhancing its market recognition and stock performance.
- Memory Market Trends: Analyst Matt Bryson noted that memory demand has not slowed post-Chinese New Year, with expectations for NAND and DRAM segments to grow by 30% to 50%, providing strong support for Micron's future performance.
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- Price Increase Trend: Amidst soaring demand, prices for Micron's DRAM and NAND chips have surged by 60% and 38% respectively in the early months of this year, enhancing the company's pricing power and laying a solid foundation for future profit growth.
- Growth Market Expectations: Micron's management anticipates that the HBM market will grow at an annual rate of 40%, reaching a size of $100 billion by 2028, providing strong growth signals for investors, despite existing market competition.
- Valuation Appeal: As of March 9, Micron's forward P/E ratio stands at 11, roughly half that of the Nasdaq-100, suggesting that even if growth slows, the stock price could feasibly double in the next five years, potentially reaching $1,000 under the most optimistic scenarios and entering the trillion-dollar club.
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- Earnings Report: Micron Technology is set to announce its quarterly earnings next week.
- Positive Outlook: Wall Street consensus suggests that the company is expected to continue experiencing strong performance.
See More
Micron's Q2 Outlook Improves, Included in S&P 500
- Q2 Earnings Outlook: Micron forecasts Q2 revenue of $18.7 billion and adjusted earnings per share of $8.42, despite analyst expectations of $19.09 billion and $8.58, indicating resilience and potential growth in the market.
- S&P 500 Inclusion: Micron will officially join the S&P 500 index on March 23, attracting investor interest and potentially enhancing its market recognition and stock performance.
- Memory Market Trends: Analyst Matt Bryson noted that memory demand has not slowed post-Chinese New Year, with expectations for NAND and DRAM segments to grow by 30% to 50%, providing strong support for Micron's future performance.
- Stock Performance: Micron's stock rose over 4% on Friday, reflecting optimistic market sentiment, with a 341% increase in stock price over the past 12 months, demonstrating investor confidence in its long-term value.
See More
Micron Technology Benefits from AI Infrastructure Investments
- Surging Market Demand: With Microsoft, Amazon, Alphabet, and Meta investing over $600 billion in GPU clusters for AI data centers, Micron's high-bandwidth memory (HBM) solutions have become critical components, solidifying the company's pivotal role in AI infrastructure.
- Price Increase Trend: Amidst soaring demand, prices for Micron's DRAM and NAND chips have surged by 60% and 38% respectively in the early months of this year, enhancing the company's pricing power and laying a solid foundation for future profit growth.
- Growth Market Expectations: Micron's management anticipates that the HBM market will grow at an annual rate of 40%, reaching a size of $100 billion by 2028, providing strong growth signals for investors, despite existing market competition.
- Valuation Appeal: As of March 9, Micron's forward P/E ratio stands at 11, roughly half that of the Nasdaq-100, suggesting that even if growth slows, the stock price could feasibly double in the next five years, potentially reaching $1,000 under the most optimistic scenarios and entering the trillion-dollar club.
See More
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- Oil Price Rebound: WTI crude oil prices increased by 0.33%, recovering from earlier lows as the US granted a waiver for buyers to import Russian oil cargoes already at sea, covering approximately 19 million barrels, indicating market concerns over supply chains and future price expectations.
- Geopolitical Risks: US officials warned that Iran has begun laying mines in the Strait of Hormuz, with smaller boats being used for operations despite the US destroying most large vessels, potentially complicating energy transport in the region and increasing global oil price volatility risks.
- Mixed Economic Data: US personal spending rose by 0.4% month-over-month in January, exceeding expectations, while non-defense capital goods new orders were unchanged, falling short of the anticipated 0.5%, highlighting the fragility of economic recovery.
- Strong Corporate Earnings: Over 98% of S&P 500 companies have reported earnings, with 74% exceeding expectations, and fourth-quarter earnings growth is projected at 8.4%, reflecting sustained corporate profitability that may support the stock market.
See More
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- AI Spending Expectations: Barclays analysts believe the market is significantly underestimating the hyperscalers' AI spending needs in the coming years, with consensus capex for 2027 and 2028 projected to be at least $225 billion too low, indicating a buying opportunity for Nvidia.
- Earnings Report Overlooked: Despite Nvidia's strong earnings report and guidance released in late February, investors largely ignored this information, resulting in the stock trading sideways since December, with a year-to-date decline of less than 1%.
- Capex Cycle: Analysts noted that the hyperscale capex cycle is expected to last until at least 2028, with Nvidia currently trading at a P/E ratio of approximately 17.5x, reflecting pessimism about future earnings power; however, this penalty seems excessive.
- New Hardware Driving Growth: Barclays anticipates that total capex for Nvidia will rise further as tech giants shift to next-generation hardware, particularly with new offerings like the Vera Rubin and Feynman chip families, which will push average selling prices above older models, benefiting AI semiconductor stocks.
See More
South Korea's Stock Market Plummets 18% Amid Airstrikes
- Market Crash: The KOSPI index in South Korea plummeted over 18% in just two days, marking its worst weekly performance since 2008, primarily driven by double-digit declines in the share prices of major memory chip manufacturers Samsung Electronics and SK Hynix, severely undermining market confidence.
- Memory Market Impact: Samsung and SK Hynix control 67% of the global DRAM market, and while rising oil prices may force them to increase chip prices, the robust global demand for DRAM suggests that their businesses may remain largely unaffected.
- U.S. Market Outlook: Despite concerns, analysts believe that U.S. chipmakers like Micron Technology and Nvidia are less likely to be impacted, as they account for only about 14% of the S&P 500, and the U.S. economy is more diversified.
- Energy Dependency Risks: South Korea's status as the world's fourth-largest oil importer makes its manufacturing and export-heavy economy particularly sensitive to energy price fluctuations, potentially exposing it to greater economic pressures in the future.
See More
Micron Gains Momentum Ahead of Earnings as Soaring Memory Prices Boost Stock Value.
- Earnings Report: Micron Technology is set to announce its quarterly earnings next week.
- Positive Outlook: Wall Street consensus suggests that the company is expected to continue experiencing strong performance.
See More
