Tech Giants' Record Capex Spending for AI
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 hours ago
0mins
Should l Buy MU?
Source: NASDAQ.COM
- Surge in Capex: In 2025, major tech companies are projected to spend $360 billion on capital expenditures, with estimates soaring to nearly $600 billion in 2026, reflecting a strong anticipation of AI demand, particularly with Amazon, Alphabet, and Meta budgeting $200 billion, $175 billion, and $115 billion, respectively.
- Memory Shortage Impact: The ongoing shortage of data center memory chips has led to skyrocketing prices, with projections indicating that memory costs could account for 45% of the increase in data center spending in 2026, significantly impacting AI processing capabilities, despite major manufacturers reallocating resources to meet demand.
- Micron's Strong Performance: Micron Technology reported record revenue of $13.6 billion in its fiscal Q1 2026, a 57% year-over-year increase, with adjusted EPS soaring to $4.78, up 167%, showcasing robust profitability amid the memory shortage backdrop.
- Optimistic Future Outlook: Micron anticipates Q2 revenue of $18.7 billion, a 132% year-over-year increase, with adjusted EPS projected at $8.42, up 440%, as management expresses confidence in sustained demand, although the cyclical nature of the memory business remains a risk to monitor.
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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: 411.660
Low
235.00
Averages
336.12
High
500.00
Current: 411.660
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 Stock Soars 239% Amid AI Chip Demand
- AI Memory Supercycle: As data centers are built and GPU clusters expand, the scaling of AI workloads creates a bottleneck in memory and storage solutions, precisely where Micron Technology operates, which is expected to drive significant performance growth.
- Earnings Growth Potential: Industry research indicates that prices for dynamic random access memory (DRAM) and NAND chips could rise by 60% and 38% respectively in Q1, providing Micron with substantial pricing power to enhance its profitability.
- Future Valuation Outlook: Despite Micron's significant potential, its stock trades at a discount compared to other AI chip leaders, with Wall Street estimating earnings per share to reach $33.73 by 2026, representing over 340% year-over-year growth.
- Investment Opportunity: Should Micron's valuation align with other leaders in the AI semiconductor market, its stock could soar between $650 and $800, suggesting up to 100% upside from current levels, highlighting its attractiveness as an investment.
See More
Micron Technology: A Promising Investment Amid AI Boom
- Impressive Returns: Micron Technology boasts an average annual return of 352% over the past year and 91% over the past three years, highlighting its strong market performance and attracting significant investor interest, particularly amid surging AI demand.
- Significant Financial Growth: In the first quarter, Micron's revenue surged by 57% and net income skyrocketed by 180%, indicating the company's substantial market share gains in the rapidly expanding AI sector and its immense future growth potential.
- Strong Market Demand: AI spending is projected to exceed $2.5 trillion in 2026 and reach $3.3 trillion in 2027, providing Micron with sustained growth momentum and solidifying its leadership position in the memory chip market.
- Valuation Considerations: While Micron's price-to-sales ratio stands at 11.1, significantly above its five-year average of 3.6, its forward price-to-earnings ratio of 10.6 is slightly below the five-year average of 11.6, reflecting a balance of market confidence and caution regarding its future growth.
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Trump's Tariffs to Increase Household Costs by $1,300
- Household Cost Impact: The Tax Foundation estimates that Trump's tariffs will increase the average U.S. household cost by $1,300 by 2026, directly affecting disposable income and consumer spending, which could suppress economic growth.
- GDP Growth Outlook: The foundation warns that if tariffs remain in place, U.S. GDP could decline by 0.5% over the next decade, indicating that businesses and consumers will face higher prices for goods and services, leading to lower income and reduced employment, ultimately impacting overall economic performance.
- Profit Margin Pressure: U.S. companies now face a dilemma due to depleted inventories; they must either raise prices, risking reduced customer spending, or absorb tariff costs, which would shrink profit margins, directly affecting stock prices.
- Market Uncertainty: The uncertainty created by tariffs has investors worried about market prospects; while other economic factors will also influence stock performance, 2026 may become a stock-picker's market, with investors having approximately $1,300 less to invest than they otherwise would.
See More
AI Surge Drives Memory Chip Demand to New Heights
- 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.
See More
Tech Giants' Record Capex Spending for AI
- Surge in Capex: In 2025, major tech companies are projected to spend $360 billion on capital expenditures, with estimates soaring to nearly $600 billion in 2026, reflecting a strong anticipation of AI demand, particularly with Amazon, Alphabet, and Meta budgeting $200 billion, $175 billion, and $115 billion, respectively.
- Memory Shortage Impact: The ongoing shortage of data center memory chips has led to skyrocketing prices, with projections indicating that memory costs could account for 45% of the increase in data center spending in 2026, significantly impacting AI processing capabilities, despite major manufacturers reallocating resources to meet demand.
- Micron's Strong Performance: Micron Technology reported record revenue of $13.6 billion in its fiscal Q1 2026, a 57% year-over-year increase, with adjusted EPS soaring to $4.78, up 167%, showcasing robust profitability amid the memory shortage backdrop.
- Optimistic Future Outlook: Micron anticipates Q2 revenue of $18.7 billion, a 132% year-over-year increase, with adjusted EPS projected at $8.42, up 440%, as management expresses confidence in sustained demand, although the cyclical nature of the memory business remains a risk to monitor.
See More
David Tepper Increases Stake in Micron Technology
- Increased Micron Stake: David Tepper boosted his holdings in Micron Technology to $428.1 million during Q4, marking a 200% increase that positions it as the fund's fourth-largest holding, reflecting strong confidence in the AI-driven market.
- Options Investment: Tepper also purchased call options on Micron with a notional value of $71.4 million, although it remains unclear if these contracts were sold or their expiration dates, indicating his optimistic outlook on the company's future performance.
- Korean Market Investment: He added a new $182.3 million position in the iShares MSCI South Korea ETF (EWY), which has rallied 34% this year, primarily benefiting from strong performances by chip leaders Samsung Electronics and SK Hynix, showcasing Tepper's focus on international AI beneficiaries.
- Other Investment Dynamics: Despite reducing his Alibaba stake by 20% in Q4, it remains his largest holding, up 6% this year; concurrently, he increased his investment in Alphabet by approximately 29%, even as the company has underperformed amid broader tech sector pressures.
See More
Micron Technology Stock Soars 239% Amid AI Chip Demand
- AI Memory Supercycle: As data centers are built and GPU clusters expand, the scaling of AI workloads creates a bottleneck in memory and storage solutions, precisely where Micron Technology operates, which is expected to drive significant performance growth.
- Earnings Growth Potential: Industry research indicates that prices for dynamic random access memory (DRAM) and NAND chips could rise by 60% and 38% respectively in Q1, providing Micron with substantial pricing power to enhance its profitability.
- Future Valuation Outlook: Despite Micron's significant potential, its stock trades at a discount compared to other AI chip leaders, with Wall Street estimating earnings per share to reach $33.73 by 2026, representing over 340% year-over-year growth.
- Investment Opportunity: Should Micron's valuation align with other leaders in the AI semiconductor market, its stock could soar between $650 and $800, suggesting up to 100% upside from current levels, highlighting its attractiveness as an investment.
See More
Micron Technology: A Promising Investment Amid AI Boom
- Impressive Returns: Micron Technology boasts an average annual return of 352% over the past year and 91% over the past three years, highlighting its strong market performance and attracting significant investor interest, particularly amid surging AI demand.
- Significant Financial Growth: In the first quarter, Micron's revenue surged by 57% and net income skyrocketed by 180%, indicating the company's substantial market share gains in the rapidly expanding AI sector and its immense future growth potential.
- Strong Market Demand: AI spending is projected to exceed $2.5 trillion in 2026 and reach $3.3 trillion in 2027, providing Micron with sustained growth momentum and solidifying its leadership position in the memory chip market.
- Valuation Considerations: While Micron's price-to-sales ratio stands at 11.1, significantly above its five-year average of 3.6, its forward price-to-earnings ratio of 10.6 is slightly below the five-year average of 11.6, reflecting a balance of market confidence and caution regarding its future growth.
See More
Trump's Tariffs to Increase Household Costs by $1,300
- Household Cost Impact: The Tax Foundation estimates that Trump's tariffs will increase the average U.S. household cost by $1,300 by 2026, directly affecting disposable income and consumer spending, which could suppress economic growth.
- GDP Growth Outlook: The foundation warns that if tariffs remain in place, U.S. GDP could decline by 0.5% over the next decade, indicating that businesses and consumers will face higher prices for goods and services, leading to lower income and reduced employment, ultimately impacting overall economic performance.
- Profit Margin Pressure: U.S. companies now face a dilemma due to depleted inventories; they must either raise prices, risking reduced customer spending, or absorb tariff costs, which would shrink profit margins, directly affecting stock prices.
- Market Uncertainty: The uncertainty created by tariffs has investors worried about market prospects; while other economic factors will also influence stock performance, 2026 may become a stock-picker's market, with investors having approximately $1,300 less to invest than they otherwise would.
See More
AI Surge Drives Memory Chip Demand to New Heights
- 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.
See More
Tech Giants' Record Capex Spending for AI
- Surge in Capex: In 2025, major tech companies are projected to spend $360 billion on capital expenditures, with estimates soaring to nearly $600 billion in 2026, reflecting a strong anticipation of AI demand, particularly with Amazon, Alphabet, and Meta budgeting $200 billion, $175 billion, and $115 billion, respectively.
- Memory Shortage Impact: The ongoing shortage of data center memory chips has led to skyrocketing prices, with projections indicating that memory costs could account for 45% of the increase in data center spending in 2026, significantly impacting AI processing capabilities, despite major manufacturers reallocating resources to meet demand.
- Micron's Strong Performance: Micron Technology reported record revenue of $13.6 billion in its fiscal Q1 2026, a 57% year-over-year increase, with adjusted EPS soaring to $4.78, up 167%, showcasing robust profitability amid the memory shortage backdrop.
- Optimistic Future Outlook: Micron anticipates Q2 revenue of $18.7 billion, a 132% year-over-year increase, with adjusted EPS projected at $8.42, up 440%, as management expresses confidence in sustained demand, although the cyclical nature of the memory business remains a risk to monitor.
See More
David Tepper Increases Stake in Micron Technology
- Increased Micron Stake: David Tepper boosted his holdings in Micron Technology to $428.1 million during Q4, marking a 200% increase that positions it as the fund's fourth-largest holding, reflecting strong confidence in the AI-driven market.
- Options Investment: Tepper also purchased call options on Micron with a notional value of $71.4 million, although it remains unclear if these contracts were sold or their expiration dates, indicating his optimistic outlook on the company's future performance.
- Korean Market Investment: He added a new $182.3 million position in the iShares MSCI South Korea ETF (EWY), which has rallied 34% this year, primarily benefiting from strong performances by chip leaders Samsung Electronics and SK Hynix, showcasing Tepper's focus on international AI beneficiaries.
- Other Investment Dynamics: Despite reducing his Alibaba stake by 20% in Q4, it remains his largest holding, up 6% this year; concurrently, he increased his investment in Alphabet by approximately 29%, even as the company has underperformed amid broader tech sector pressures.
See More
