Micron Technology's Growth Potential in AI Chips for 2026
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1d ago
0mins
Source: Fool
- Surging Market Demand: According to Goldman Sachs, big tech is expected to spend over $500 billion on AI capital expenditures in 2026, indicating a strong demand for AI technologies, particularly in memory and storage solutions.
- Memory Market Outlook: Micron Technology specializes in high-bandwidth memory (HBM) chips, with its total addressable market projected to grow at a 40% compound annual growth rate, reaching $100 billion by 2028, highlighting the strategic significance of the company in this niche.
- Profitability Enhancement: With memory demand already outpacing supply, Micron has the leverage to raise prices for its memory and storage chips, which should complement revenue acceleration while maintaining healthy profit margins, thereby strengthening the company's financial stability.
- Investment Opportunity: Despite Micron's stock soaring nearly 300% over the past year, its forward P/E ratio remains lower than that of other leading semiconductor firms, and analysts expect earnings per share to reach about $33 in 2026, indicating significant growth potential for the stock.
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Analyst Views on MU
Wall Street analysts forecast MU stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for MU is 336.12 USD with a low forecast of 235.00 USD and a high forecast of 500.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
26 Analyst Rating
24 Buy
2 Hold
0 Sell
Strong Buy
Current: 435.790
Low
235.00
Averages
336.12
High
500.00
Current: 435.790
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.
Micron Technology's High-Bandwidth Memory Chips Experience Rapid Growth
- Data Center Revenue Doubling: Micron Technology's data center revenue doubled to approximately $5.3 billion in the most recent quarter, reflecting strong demand in the AI sector and indicating potential for further overall performance growth.
- Significant Profitability Increase: In the first quarter of fiscal 2026, Micron's earnings soared to $4.60 per share, a 175% year-over-year increase, demonstrating enhanced pricing power in the high-bandwidth memory market and substantial profit growth.
- Expansive Market Outlook: Micron's CEO predicts that the data center high-bandwidth memory market will reach a value of over $100 billion by 2028, highlighting significant strategic opportunities for the company, especially as AI workloads gradually shift to personal devices.
- Production Capacity Expansion: Micron is ramping up production of its next-generation HBM4E chips, which are expected to improve capacity by 60% and energy efficiency by 20%, with the entire supply for 2026 already sold out, indicating strong market demand for its products.
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Micron Technology: Growth Potential Driven by AI Demand
- Market Growth Expectations: Wall Street anticipates that Micron Technology (MU) will see its earnings per share soar from $8.29 in FY 2025 to $33.31 in FY 2026, indicating strong growth potential driven by surging demand for memory chips.
- Price Surge Drivers: The massive demand for generative AI has led to a significant spike in memory chip prices, allowing Micron to raise prices in response to supply imbalances, thereby enhancing its profitability.
- Cyclical Risks: Despite the current strong demand, memory demand is highly cyclical, and there are concerns that prices may crash once Micron and its peers build sufficient production capacity, negatively impacting stock performance.
- Investment Opportunity: While I personally prefer steadier investments, Micron's stock could represent a highly attractive investment opportunity over the next five years due to sustained AI demand, allowing savvy investors to potentially achieve substantial returns.
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