This article first appeared on GuruFocus.
Micron Technology (MU, Financials) has been a major winner in the AI-driven memory boom with revenue and earnings increasing amid sustained demand for high-bandwidth memory.
Micron’s sales last quarter was $41.46 billion, up dramatically from $9.3 billion a year earlier. Its bottom line was boosted by increased demand and improved memory pricing, with GAAP net income of $28.24 billion.
The crucial question is whether the boom can be maintained, or whether at some point more output will create excess supply and put the squeeze on pricing.
The market is still digesting additional capacity, says investor Millennial Dividends. Low finished inventories at Samsung and SK Hynix lead the investor to forecast that around 70% of memory manufactured in 2026 will be for data centers.
The investor also believes the three big providers of DRAM and HBM have sold all their capacity until next year, which could keep the memory market tight as AI infrastructure increases.
Demand for data centers is strong and new capacity coming online might set Micron’s next development phase. Millennial Dividends says the combination is a tailwind to additional earnings growth and Micron isn’t demanding on a fiscal 2027 value.
Wall Street has 29 Buy recommendations and one Hold at the moment, with an average 12-month price goal of $ 1,564.44.
The next driver is whether Micron can keep pricing power when new memory capacity is added and AI demand continues to swallow supply.