Graphics processing units (GPUs) are the main data center chips used in artificial intelligence (AI) development. The best GPUs in the industry are supplied by Nvidia and Advanced Micro Devices, and both of those companies source an important component called high-bandwidth memory (HBM) from Micron Technology(NASDAQ: MU).
Micron’s HBM solutions are fitted alongside advanced GPUs, where they keep data flowing seamlessly to unlock maximum processing speeds. The company is experiencing astronomical demand right now, which is driving a surge in its revenue and earnings. As a result, its stock has gained a whopping 323% over the last 12 months alone.
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But can the blistering returns continue?
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GPUs need a constant flow of data when training AI models and serving them to end-users. HBM stores this data in a ready state for when the GPU needs it, and the higher the memory capacity, the more data it can hold in the pipeline. Conversely, a low memory capacity would lead to bottlenecks, forcing the GPU to pause its workloads while it waits to receive fresh data.
Micron’s HBM3E solution for the data center offers 50% more capacity than the competition, while consuming 30% less energy. This is a winning combination for AI developers who want the fastest processing speeds and the lowest possible cost.
But Micron will ramp up production of its new HBM4E solution this year, which will deliver a whopping 60% more capacity than HBM3E, while consuming 20% less energy. It is expected to power Nvidia’s new Vera Rubin chips, which will be the most powerful in the world for AI workloads when they enter mass production in the second half of 2026.
Micron’s entire 2026 supply of data center HBM is already completely sold out, but its opportunity is only just ramping up. This market was worth $35 billion in 2025, and the company says it could grow by 40% per year until 2028, reaching $100 billion.
Micron wrapped up its fiscal 2026 second quarter at the end of February, and it’s scheduled to report its operating results for the period on March 18. Based on management’s guidance, the company’s total revenue likely came in at a record $18.7 billion, which would be a whopping 132% from the year-ago quarter. That would be a significant acceleration from the 56% growth it produced in the first quarter, just three months earlier.
Micron’s cloud memory segment (where it reports data center HBM sales) was the star of the show in the first quarter, with revenue nearly doubling year over year to $5.3 billion. I would expect an even stronger result on March 18, based on management’s overall top-line forecast.
The other big thing to watch on March 18 is Micron’s earnings, which are expected to explode higher by 480% year over year to $8.19 per share. As was the case with the top line, this would also be a major acceleration from the 175% growth the company produced in the first quarter.
Earnings drive stock prices, so this number — along with management’s forecast for the next quarter — could dictate whether further gains are ahead for Micron shareholders.
The semiconductor industry has always been very cyclical, meaning companies would spend a lot of money to build infrastructure and then pull back for several years, until it was time to upgrade. AI has shortened that upgrade cycle to 12 months — or less in some cases — so data center operators are continuously spending money.
In fact, Nvidia CEO Jensen Huang believes data center operators will be spending up to $4 trillion per year on AI infrastructure by 2030 to meet demand for cloud computing capacity from developers. A lot of that spending will flow to chipmakers, and if you believe Nvidia will continue selling truckloads of GPUs, then it’s only logical to be bullish on Micron’s business, given HBM is such a key piece of the puzzle.
Based on Micron’s trailing 12-month earnings of $10.52 per share, its stock is trading at a price-to-earnings (P/E) ratio of 36.6, which is almost exactly in line with Nvidia’s P/E. From that perspective, one could argue Micron is probably fairly valued.
But here’s where things get interesting. Wall Street’s consensus estimate (provided by Yahoo! Finance) suggests Micron’s full-year fiscal 2026 earnings will come in at $34.16 per share, placing its stock at a forward P/E ratio of just 11.3.
Data by YCharts.
That means the stock would have to rocket higher by another 223% over the next six months alone just to maintain its current P/E ratio of 36.6.
I’m not suggesting that will happen, because there are certainly risks on the horizon. For example, leading start-up OpenAI recently said it will reduce its planned infrastructure spending between now and 2030 to $600 billion, from $1.4 trillion previously. If this becomes an industrywide phenomenon, then Huang’s forecast might be too ambitious.
Nevertheless, there is certainly room for upside in Micron stock as things currently stand. It might not triple over the next six months, but I won’t be surprised if it’s trading much higher.
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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, Micron Technology, and Nvidia. The Motley Fool has a disclosure policy.
How Much Higher Can Micron Stock Go? was originally published by The Motley Fool
