Micron Technology, Inc. (MU) has already been one of the market’s biggest artificial intelligence (AI) winners, but I do not think the story is over yet. The memory and storage solutions company’s stock is up more than 660% over the past 12 months, aided by its strong financial performance. I am bullish on Micron as I believe the company is well-positioned to benefit from a continued demand-supply imbalance in the Dynamic Random Access Memory (DRAM) market caused by aggressive AI spending by hyperscalers, which in turn will boost Micron’s earnings.
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Micron Benefits from a Demand-Supply Imbalance for DRAM
My bullish stance is centered around the pricing power enjoyed by Micron’s DRAM products due to a severe imbalance between demand and supply in the DRAM market. Demand for DRAM products has surged exponentially since the launch of OpenAI’s ChatGPT in late 2022. According to S&P Global (SPGI) research, high-bandwidth memory (HBM) products now consume a very high amount of DRAM wafer area per Graphics Processing Unit (GPU). The number of GPU shipments has increased sharply, with data centers catering to the surging demand for AI adoption.
Although the demand for DRAM products has risen sharply since 2022, production has not kept pace due to very long lead times and the capital-intensive nature of production. The result is a severe shortage of DRAM products to meet the growing demand. This demand-supply imbalance has led to a sharp increase in DRAM prices.
For the second quarter of Fiscal 2026, Micron reported a 207% year-over-year increase in DRAM revenue to $18.77 billion. According to Micron, a 60% quarter-over-quarter increase in average selling prices (ASPs) for DRAM products was the primary driver of this stellar revenue growth. Micron seems likely to benefit from higher ASPs in the foreseeable future as the demand-supply imbalance in the DRAM market is poised to remain unchanged.
The Data Center Business Is in the Thick of the AI Revolution
My bullish stance is strengthened by the aggressive capex spending by hyperscalers to convert traditional data centers into AI infrastructure hubs. Micron is proving to be an indispensable middleman, enabling this transformation. According to BloombergNEF, the 14 largest public data centers are expected to spend north of $750 billion in 2026 to embrace AI. This represents a massive increase from $450 billion last year.
For Micron, the good news is that the bulk of these data center investments are focused on AI infrastructure spending. This is where Micron’s DRAM products come into play. According to International Data Corporation (IDC), global AI spending will eclipse $1 trillion by 2029 as companies race to embrace agentic AI.
This aggressive capital expenditure by hyperscalers to build out AI infrastructure directly translates into massive demand for high-performance memory. Micron is already positioned as a critical supplier of HBM, which is essential for advanced AI accelerators.
Mobile Can Be the Next AI Growth Driver
Micron’s strong presence in the mobile DRAM market has also enabled it to benefit from the growing penetration of AI-enabled smartphones. According to Counterpoint Research, GenAI-capable smartphone shipments are expected to have surpassed 400 million in 2025. Smartphone makers’ quest to embrace on-device AI capabilities has led to a massive surge in memory density per device. This is where Micron becomes a big winner.
According to Counterpoint data, the global average smartphone DRAM reached a record high of 8.4GB in 2025, growing from just 7.4GB in 2024. The primary driver behind this DRAM increase is the integration of on-device AI features.
Micron is already making the most of this DRAM growth in smartphones. In Q2 2026, Micron’s Mobile and Client Business Unit reported record revenue of $7.71 billion after growing 81% quarter-over-quarter. This business now accounts for almost a third of total revenue. To support advanced AI features in future-generation smartphones, Micron has already ramped up production of its flagship 10.7 Gbps 1y LPDDR5X 16Gb DRAM product.
PCs and Workstations Lead the Edge AI Hardware Reset
In addition to the expected growth in AI-enabled smartphone shipments, Micron will benefit from the hardware reset in the personal computer (PC) end market as well. Given that many IT professionals are now demanding personal workstations capable of on-device agentic AI, the personal computer market is undergoing a massive structural transformation.
According to many industry experts, PCs need at least 32GB of memory to handle on-device AI tools. However, for advanced use cases, the required memory capacity is at least 128GB. According to Grand View Research, the global AI PC market will grow at a CAGR of 34% through 2030, lifting the market value from just $51 billion in 2024 to $282 billion by 2030. Micron will benefit from this strong growth in demand for high-memory capacity PCs.
Valuation
Micron is currently valued at a forward P/E of approximately 12x. Even over the past five years, the historical forward P/E average has typically been closer to 15x. This suggests that despite the massive stock rally, Micron is actually trading at a discount to its historical earnings multiple. Given the strong growth expected in the coming years as AI use cases expand, Micron stock looks to have substantial upside from here. Even if the market keeps the multiple compressed at 12x, the sheer scale of higher earnings alone will mathematically drive the stock price higher.
Is Micron a Buy, According to Wall Street Analysts?
Based on the ratings of 30 Wall Street analysts, the average Micron price target is $657.41, which implies a downside of nearly 6% from the current market price.
Takeaway
Micron is firing on all cylinders. The good news is that the company may still be getting started. As AI use cases continue to grow, smartphone manufacturers and PC makers are in a race to offer products with higher DRAM capacity. Micron is perfectly positioned to serve this demand. The ongoing supply crisis for memory products has also boosted the average selling prices of DRAM, thereby improving Micron’s profit margins. I am bullish on Micron because I believe the company has significant room to grow over the next five years.