Micron Technology Inc. (MU) shares rallied more than 15% on Friday, last trading at $746.81, propelling the company's market capitalization to approximately $853 billion. The surge comes as investors pile into memory-chip stocks tied to the explosive growth of AI data center infrastructure. Sandisk also spiked over 16% on similar demand dynamics.
The AI trade has evolved beyond its initial focus on graphics processors, with memory becoming a critical component. Micron's portfolio includes DRAM, essential for server and device memory, NAND flash storage, and high-bandwidth memory (HBM), which is stacked close to AI processors to accelerate data transfers. This positions Micron alongside South Korea's SK Hynix and Samsung Electronics in a select group of memory suppliers.
On May 8, Reuters reported that SK Hynix was fielding an unusual rush of investment proposals from major global tech companies, with buyers eager to lock in memory chip supply. SK Hynix, Samsung, and Micron have each confirmed ongoing discussions with customers about multi-year supply deals, underscoring the strategic importance of memory in the AI era.
Micron's fiscal second-quarter results fueled the rally. Revenue nearly tripled year-over-year to $23.86 billion, while GAAP net income reached $13.79 billion, or $12.07 per share. "Memory has become a strategic asset for our customers," CEO Sanjay Mehrotra said. For the fiscal third quarter, the company targets revenue of $33.5 billion, plus or minus $750 million.
The company is ramping up capital expenditures to address supply constraints. In its prepared remarks, Micron said it expects DRAM and NAND supply-demand to remain tight beyond calendar 2026. For fiscal 2026, capital expenditures—covering plant and equipment investments—are projected to exceed $25 billion.
Wall Street analysts are bullish. Mizuho's Vijay Rakesh raised his price target on Micron to $740 from $545, maintaining an Outperform rating. According to Investing.com, Rakesh cited "agentic AI"—AI capable of managing tasks with minimal human intervention—as driving memory demand higher. Roundhill CEO Dave Mazza told Business Insider that "memory chips are the AI bottleneck," noting that bringing new fabrication plants online is a three-to-five-year process and that Micron's HBM supply for 2026 is already locked in under fixed pricing deals.
However, the rally comes with cautionary notes. Bernstein analyst Mark Li forecasts a sharp jump in memory contract prices for the second quarter but points to conflicting signs in the spot market: price hikes are cooling consumer demand, and both original equipment makers and module houses have pulled back on purchases. Bernstein does not expect the price momentum to last, foreseeing a significant slowdown in increases by the third quarter.
Signs of strain are emerging across end markets. Sony projects a 6% decline in annual gaming sales to 4.42 trillion yen, citing surging memory chip prices as a key headwind. The company warns that its PlayStation 5 hardware forecast depends on securing enough memory at "reasonable prices."
For Micron, the key question is whether multi-year customer deals will smooth out the sharp cyclical swings that have historically defined memory markets. Investors clearly believe supply will remain tight for now, but the risk is that prices could climb quickly enough to deter buyers before new capacity comes online.
