Banking on the booming artificial intelligence (AI) demand, Micron Technology MU jumped from a $700 billion market capitalization, a few weeks back, to a $1 trillion milestone on Tuesday, making it one of the most valuable U.S. tech companies. Unwavering demand for AI has triggered a global memory shortage, strengthening Micron’s pricing power and boosting the company as demand continues to exceed supply.
Micron’s shares have climbed more than 200% this year and have outperformed Wall Street darling NVIDIA Corporation’s NVDA gain of roughly 15% in the same stretch. Although NVIDIA posted solid earnings in the latest quarterly report, the stock gains were muted, as much of the optimism had already been priced in.
Moreover, investors remained concerned about growth prospects due to China-related export curbs and intensifying competition from rivals like Advanced Micro Devices, Inc. AMD.
Let us thus look in detail at why Micron has emerged as the standout performer of the year, and why the stock may still be worth buying now.
Micron Gains Momentum on Strong AI-Driven Memory Demand
Micron witnessed strong demand for its coveted high-bandwidth memory (“HBM”) chips as hyperscalers increased their investments in AI infrastructure. These HBM solutions are highly sought after because of their capability to process complex workloads efficiently while using less power.
By the way, HBM chips are in short supply and are expected to stay constrained throughout this year. This demand-supply imbalance has allowed Micron to raise prices while struggling to meet supply needs, bolstering its long-term growth. A tight supply situation also exists for Micron’s NAND flash chips through mid-next year, which further strengthens margin expansion.
As a result, Micron expects a solid gross margin of around 81% for the fiscal third quarter of 2026, signaling strong financial momentum, according to investors.micron.com.
The company also expects revenues to increase from $23.86 billion in the fiscal second quarter of 2026 to $33.5 billion in the fiscal third quarter, particularly due to the accelerating demand for HBM chips.
What Makes Micron the Better Investment Now
Beyond hitting record highs, Micron’s shares still have potential upside, banking on robust demand for its AI-focused memory chips amid tight supply conditions and expectations of improved quarterly performance.
On the technical front, Micron’s shares remain well above the long-term 200-day moving average (DMA) and the short-term 50 DMA, confirming sustained upward momentum.
Technical Indicator & Overlays – Micron
Image Source: Zacks Investment Research
Taken together, these factors make Micron a compelling buy for the long run. Additionally, buying Micron’s shares is relatively inexpensive compared to its peers, giving investors a potential edge. Per the price/earnings ratio, MU trades at 15.2 forward earnings. In comparison, the Computer – Integrated Systems industry’s forward earnings multiple is 18.78.
Image Source: Zacks Investment Research
Micron currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
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The AI revolution has already minted millionaires. But the stocks everyone knows about aren’t likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon and Google were to the internet era.
Advanced Micro Devices, Inc. (AMD) : Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).
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