Memory Chips Become Crucial in AI Data Centers
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 days ago
0mins
Should l Buy MU?
Source: NASDAQ.COM
- Surging Market Demand: The rapid growth of artificial intelligence has made memory and storage chips critical components of data center architecture, with Micron and SanDisk expected to see significant earnings growth over the coming years, creating a structural supercycle.
- Technological Leadership: Micron's leadership in high-bandwidth memory (HBM) has resulted in substantial revenue growth in AI servers, particularly as hyperscale cloud infrastructure expands, leading to significant profit margin increases.
- Storage Solutions Innovation: SanDisk's NAND flash solutions efficiently store petabytes of data generated by AI workloads at low costs, transforming its business model into a high-growth market player.
- Investment Risk Management: The launch of the Roundhill Memory ETF provides investors with a diversified risk exposure opportunity, currently with an expense ratio of 0.65%, allowing participation in the memory supercycle without the risks associated with individual stocks.
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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: 766.580
Low
235.00
Averages
336.12
High
500.00
Current: 766.580
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 Cloud Memory Business Unit (CMBU), Core Data Center Business Unit (CDBU), Mobile and Client Business Unit (MCBU) and Automotive and Embedded Business Unit (AEBU). CMBU is focused on memory solutions for large hyperscale cloud customers, and high bandwidth memory (HBM) for all data center customers. CDBU is focused on memory solutions for mid-tier cloud, enterprise, and OEM data center customers and storage solutions for all data center customers. MCBU is focused on memory and storage solutions for mobile and client segments. AEBU is focused on memory and storage solutions for the automotive, industrial, and consumer segments.
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.
Micron Technology's 787% Stock Surge Sparks Valuation Debate
- Stock Surge: Micron Technology's shares have skyrocketed by 787% over the past year, reaching all-time highs, despite analysts being divided on its valuation, reflecting strong market confidence in its future growth.
- Valuation Metrics: Micron's trailing P/E ratio has risen to about 35, significantly above the five-year average of 28.5; however, its forward P/E stands at just 7.6, indicating it may still be undervalued.
- Revenue Growth: The company's revenue is projected to nearly triple from $8 billion in Q2 2025 to $23.8 billion in 2026, highlighting robust demand in the high-bandwidth memory market, particularly driven by artificial intelligence.
- Supply-Demand Dynamics: Micron's entire supply for 2026 is sold out, with expectations that this trend will continue, underscoring its critical role in AI infrastructure development and further solidifying its market position.
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- Supply-Demand Imbalance: Analysts indicate that memory manufacturers are facing tighter production conditions due to the lengthy and costly process of building new capacity, making this supply-demand imbalance a crucial part of the bullish narrative.
- High-Bandwidth Memory Advantage: Micron has emerged as a significant winner in the high-bandwidth memory market, particularly in advanced AI chips, further solidifying its market position amid rising demand.
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- Stock Surge: Micron Technology's shares have skyrocketed by 787% over the past year, reaching all-time highs, despite analysts being divided on its valuation, reflecting strong market confidence in its future growth.
- Valuation Metrics: Micron's trailing P/E ratio has risen to about 35, significantly above the five-year average of 28.5; however, its forward P/E stands at just 7.6, indicating it may still be undervalued.
- Revenue Growth: The company's revenue is projected to nearly triple from $8 billion in Q2 2025 to $23.8 billion in 2026, highlighting robust demand in the high-bandwidth memory market, particularly driven by artificial intelligence.
- Supply-Demand Dynamics: Micron's entire supply for 2026 is sold out, with expectations that this trend will continue, underscoring its critical role in AI infrastructure development and further solidifying its market position.
See More
Key Market Insights: Semiconductor and AI Stocks
- Semiconductor and AI Stock Rebound: After a day of selling, stocks like Micron and Corning are rebounding this morning, indicating ongoing market interest in semiconductor and AI stocks, despite S&P futures declining due to hotter-than-expected April wholesale inflation data.
- Nvidia Price Target Increase: Bank of America raised Nvidia's price target from $300 to $320, reflecting optimism ahead of its upcoming earnings report, while CEO Jensen Huang's attendance at the summit with Trump in China may further boost the stock.
- Qnity Electronics Strong Performance: Following a strong earnings report, Qnity Electronics saw price target increases from Deutsche Bank and BMO Capital to $180 and $200 respectively, showcasing market confidence in AI stocks, particularly amidst a broader market downturn.
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See More
Micron Technology Receives Major Wall Street Confidence Boost
- Price Target Increase: Bank of America raised Micron Technology's stock price target from $500 to $950 while maintaining a Buy rating, reflecting confidence in the sustained growth of memory demand tied to AI servers and data centers.
- Supply-Demand Imbalance: Analysts indicate that memory manufacturers are facing tighter production conditions due to the lengthy and costly process of building new capacity, making this supply-demand imbalance a crucial part of the bullish narrative.
- High-Bandwidth Memory Advantage: Micron has emerged as a significant winner in the high-bandwidth memory market, particularly in advanced AI chips, further solidifying its market position amid rising demand.
- Investor Focus: As global AI spending accelerates, investors will be keen to see if Micron can maintain pricing power and continue delivering strong earnings growth, ensuring its competitiveness in the rapidly evolving market.
See More
Wall Street's Latest Ratings Overview
- Nvidia's Positive Outlook: Oppenheimer reiterates Nvidia as an outperform, projecting CY26 free cash flow to approach $200 billion, and if half is allocated for dividends, the yield could reach nearly 2.5%, which would bolster investor confidence and drive stock price appreciation.
- Apple's Strong Ecosystem: Daiwa raises Apple's price target from $310 to $325, emphasizing its vast ecosystem as a core strength, while acknowledging potential memory management challenges in 2H CY26, the long-term outlook remains favorable for this core holding.
- Positive Outlook for Housing Platform: UBS upgrades KE Holdings to buy from neutral, citing significant upside due to its agency business in tier 1 cities, particularly as the market recovery is led by the secondary market, positioning the company for strong performance.
- Wendy's Potential Privatization: Argus upgrades Wendy's to buy from neutral, driven by news of a potential move to take the restaurant chain private, with Trian Fund Management owning about 40% of the stock, indicating strong market confidence in this strategic shift.
See More
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- EchoStar Stock Surge: EchoStar's shares rose nearly 4.5% following the FCC's approval of its $40 billion sale of wireless spectrum to AT&T and SpaceX, which is expected to significantly enhance the company's financial position and market competitiveness.
- Alibaba Profit Plunge: Alibaba's U.S.-listed shares fell 3% after reporting an 84% drop in Q1 profit, indicating severe short-term profitability challenges despite heavy investments in AI, which may hinder its future market performance.
- Nextpower Revenue Guidance Upgraded: Nextpower raised its full-year revenue guidance to a range of $3.8 billion to $4.1 billion, up from $3.6 billion to $3.8 billion, resulting in a 14% stock surge that reflects the company's strong growth potential in the energy sector.
- Resideo Earnings Guidance Miss: Resideo's shares plunged nearly 9% after guiding for current-quarter adjusted earnings between 71 to 75 cents per share, below the analyst expectation of 84 cents, despite beating first-quarter estimates, indicating potential investor concerns about future performance.
See More
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- Market Recovery: On Wednesday, S&P 500 and Nasdaq futures rose by 16.75 points (0.23%) and 239.75 points (0.82%), respectively, indicating investor optimism as they await crucial economic data, despite losses in the previous session.
- Oil Price Decline: Oil prices fell after a three-day rally, providing some relief to the markets; however, investors remain wary that ongoing conflicts could keep energy prices elevated, adding inflationary pressures that may complicate the Federal Reserve's policy outlook.
- Fed Policy Expectations: With Kevin Warsh confirmed to the Federal Reserve board, markets are anxious about a potentially more hawkish stance, as the probability of a 25-basis-point hike in December has risen to 28%, reflecting uncertainty regarding future monetary policy.
- Chip Stock Stabilization: Following a selloff in the previous session, chip stocks showed signs of stabilization, with Micron Technology (MU.O) rising 6.2% and Western Digital (WDC.O) gaining 3.1%, indicating a gradual recovery in market confidence towards the semiconductor sector.
See More
