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.
I still think there’s a lot of room for Micron, and the company says it’s working to secure several multiyear contracts that will lock in growth for the foreseeable future. While the headlines focus on the world’s major AI players, the biggest surprise may be behind-the-scenes memory makers like Micron.
Before you buy stock in Micron Technology, consider this:
The Motley Fool Stock Advisor The analyst team just identified what they believe 10 Best Stocks Investors to buy now… and Micron Technology was not one of them. 10 stocks to make the cut can produce monster returns for years to come.
Consider when Netflix Made this list on December 17, 2004… If you invest $1,000 during our recommendation, You will have $464,439!* or when Nvidia Made this list on April 15, 2005… If you invest $1,000 during our recommendation, You will have $1,150,455!*
Now, this is worth noting Stock advisor The total average return is 949% — market-crushing outperformance compared to 195% for the S&P 500. Don’t miss the latest top 10 list available Stock advisorAnd join an investment community built by individual investors for individual investors.
View 10 Stocks »
*Stock advisor returns as of January 25, 2026.
Katie Hogan has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Micron Technology. Motley Fool has a disclosure policy.
Why this AI stock could be the biggest surprise of 2026 was originally published by The Motley Fool
Much of the growth in artificial intelligence (AI) has been driven by software and chatbots,…
Work friendships can be comforting — until they make you question everything. Like when someone…
High yielding dividend stocks often have high risk profiles. with about 8% yield, MPLX (NYSE:…
Until recently, the narrative around AI was that the $600 billion in annual corporate capital…
As someone who has covered the retail sector for more than a decade, I can…
Michael Burry is sounding the alarm about what could happen if Bitcoin continues to slide…