Behind every AI company is a memory provider working overtime to meet demand. That’s why Micron Technology (name: mu)The maker of computer memory, may be the biggest surprise of 2026.
Of course, we know Micron stock is up more than 260% in the past 12 months, but what’s surprising is that the company will be in the driver’s seat for high-bandwidth memory (HBM) for the next several years. Micron specializes in this type of memory, which is important for artificial intelligence processing. Supply is so outstripping demand that Micron is already completely sold out in 2026.
Memory is essential for AI’s cognitive function. According to Micron’s latest investor presentation, AI relies heavily on advanced memory for real-time reference processing. It has applications ranging from AI data centers to self-driving cars and medical diagnostics.
In its first-quarter fiscal 2026 earnings, Micron reported revenue up 57% year-over-year to $13.6 billion. Gross margin was around 57%, but the company expects to expand to 68% in Q2. This top-line growth means greater profitability and potentially higher rewards for shareholders through stock buybacks and dividends. Over the past two years, Micron has spent $1 billion to repurchase 13 million shares and paid out $1.7 billion in dividends.
The HBM market is expected to grow at a compound annual growth rate (CAGR) of 40% by 2028. Micron expects the total addressable market to reach $100 billion by then. That milestone could be reached two years earlier than Micron had previously estimated.
Equally important is Micron’s leverage in HBM pricing. Since supply is so limited, Micron can capitalize on the unprecedented demand and raise prices accordingly.
The biggest risk for Micron right now is a weak market for HBM. If AI overall plateaus or slows adoption, it will directly affect Micron. This seems somewhat unlikely, as the company plans to open new plants and expand existing ones to meet customer orders.
Micron’s stock is up 38% year-to-date as of Jan. 22. Despite this significant increase in price earlier in the year, Micron is still reasonably priced. Its forward price-to-earnings (P/E) ratio is currently around 12. This multiple is well below the tech industry average, which ranges in the mid-20s. As of January 22, the company’s market cap has crossed $400 billion.
