Micron Sees Increased Demand for HBM-Driven DRAM: Will AI Continue to Fuel Growth?
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Dec 03 2025
0mins
Should l Buy AVGO?
Source: NASDAQ.COM
Micron's DRAM Growth: Micron Technology is experiencing significant growth in its DRAM segment, with revenues increasing 68.7% year-over-year to $8.98 billion, driven by rising demand for high-bandwidth memory (HBM) due to expanding AI workloads.
Future Prospects: The company is preparing to transition to HBM4 and has secured pricing agreements for its HBM3E supply, indicating strong revenue growth visibility as demand from AI applications continues to rise.
Market Position and Competition: Micron's growth is supported by tight DRAM supply and limited industry capacity, while competitors like Intel and Broadcom are also expanding their AI memory chip offerings, enhancing the overall HBM supply chain.
Stock Performance and Valuation: Micron's shares have surged 184.6% year-to-date, and it trades at a forward price-to-earnings ratio of 13.01, significantly lower than the industry average, with strong earnings growth estimates for fiscal 2026 and 2027.
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Analyst Views on AVGO
Wall Street analysts forecast AVGO stock price to rise
30 Analyst Rating
29 Buy
1 Hold
0 Sell
Strong Buy
Current: 319.550
Low
370.00
Averages
457.75
High
525.00
Current: 319.550
Low
370.00
Averages
457.75
High
525.00
About AVGO
Broadcom Inc. is a global technology firm that designs, develops, and supplies a range of semiconductors, enterprise software and security solutions. The Company operates through two segments: semiconductor solutions and infrastructure software. Its semiconductor solutions segment includes all of its product lines and intellectual property (IP) licensing. It provides a variety of radio frequency semiconductor devices, wireless connectivity solutions, custom touch controllers, and inductive charging solutions for mobile applications. Its infrastructure software segment includes its private and hybrid cloud, application development and delivery, software-defined edge, application networking and security, mainframe, distributed and cybersecurity solutions, and its FC SAN business. It provides a portfolio of software solutions that enable customers to plan, develop, automate, manage and secure applications across mainframe, distributed, mobile and cloud platforms.
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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- AI Revenue Surge: Broadcom anticipates Q1 AI revenues exceeding $9 billion, showcasing the company's robust performance in the rapidly growing AI market, thereby solidifying its market leadership.
- Optimistic Future Outlook: The company projects AI revenues to surpass $65 billion in FY26 and exceed $120 billion in FY27, indicating significant revenue growth potential in the coming years.
- Earnings Upgrade Expectations: With the strong growth in AI business, Broadcom is expected to raise its earnings forecast in the upcoming earnings report, which could further boost investor confidence and potentially elevate stock prices.
- Market Strategy Shift: The surge in AI revenues not only reflects Broadcom's technological innovation capabilities but also indicates a strategic shift in the global semiconductor market, aiming to capitalize on new opportunities presented by AI technologies.
See More
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- Minor Stock Decline: Broadcom's shares fell 0.2% on Monday, reflecting investor caution despite the company's leading position in the AI revolution, indicating a lack of confidence in its immediate market performance.
- Analyst Price Target Cut: RBC Capital's analyst Srini Pajjuri lowered Broadcom's price target from $370 to $340 while maintaining a 'hold' rating, signaling concerns about the company's short-term outlook despite its strong fundamentals.
- Optimistic Earnings Outlook: Despite the price target reduction, the analyst anticipates that Broadcom will report a 'beat and raise' quarter for Q1 FY2026, driven by increased demand for tensor processing units (TPUs) supplied to Google, which could bolster growth.
- Risks with Anthropic Relationship: The analyst expressed concerns regarding Broadcom's relationship with AI developer Anthropic, noting that while current supply agreements will generate revenue, demand may decline after the first half of 2027, posing risks to the company's future revenue stability.
See More
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- Optimistic Earnings Outlook: Despite the price target reduction, Pajjuri anticipates that Broadcom will report a 'beat and raise' quarter for Q1 fiscal 2026, driven by strong demand for tensor processing units (TPUs) produced for Google, which could enhance the company's growth.
- Concerns Over Anthropic Relationship: The analyst expressed concerns about Broadcom's relationship with AI developer Anthropic, noting that while current supply agreements will generate revenue, demand may decline after the first half of 2027, potentially impacting the company's long-term revenue stability.
- High Market Valuation: Broadcom currently trades at approximately a 25% premium to AI chip leader Nvidia, and while its diversified business model allows it to benefit from the AI boom, this high valuation may pose risks for investors in the short term.
See More
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- Increased Valuation Appeal: Nvidia's forward price-to-earnings ratio has dropped from the mid-30s in August to 22 times, marking the lowest level since last April's tariff announcement, suggesting that the current stock price is more attractive amid surging AI spending, potentially drawing more investor interest.
- Analysts Optimistic on Future: Morgan Stanley has reinstated Nvidia as their top pick, replacing Micron, which surged due to AI-related memory price increases; analysts noted that while Nvidia's stock has stagnated over the past two quarters, its business has continued to strengthen, with expectations of a shift towards optimism for 2027 in the coming months.
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See More
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- New Product Launch: Apple unveiled the new budget iPhone 17e on Monday, starting at $599, which is $200 cheaper than the standard model, reflecting the company's proactive strategy to attract more users into its ecosystem while setting the stage for upcoming product announcements.
- Sales Growth Potential: The launch of the iPhone 17 series coincides with a 23% increase in overall sales during the holiday quarter, which not only strengthens Apple's market position but also has the potential to enhance its high-margin subscription services like Apple Music by attracting users seeking AI capabilities.
- Executive Transition Impact: Eaton has appointed former executive David Foster as the new CFO, replacing Olivier Leonetti, who announced his departure last year; Foster's extensive experience at Eaton is expected to facilitate a smooth transition and drive the company's strategic shift towards the data center market.
See More
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- Surge in Energy Prices: The halt of tanker traffic through the Strait of Hormuz due to Iran's attacks on three oil tankers led to WTI crude oil prices soaring over 65% to an 8.25-month high, potentially exacerbating global inflationary pressures.
- Defense Stocks Rise: The ongoing conflict in Iran has bolstered earnings prospects for defense companies, with Aerovironment's stock rising over 12%, while Northrop Grumman and RTX Corp also saw increases of over 4%, reflecting market optimism about defense spending.
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