-
Micron Technology makes DRAM and HBM memory chips that are essential for AI computations.
-
The company has sold its entire 2026 inventory of such chips before the end of 2025.
-
Despite the massive jump in its share price, Micron is still reasonably valued.
-
10 stocks we like better than Micron Technology ›
When you think of artificial intelligence (AI) semiconductors, you tend to think of graphics processing units (GPUs) from companies like Nvidia (NASDAQ: NVDA) which perform the actual computations that the AI requires.
But not all semiconductor chips are the same, and not all are made by Nvidia. In fact, some of the most important resources for Nvidia GPUs are the memory chips that keep data accessible. And the memory chip company that is quietly becoming a cornerstone of the AI boom is Micron Technology (name: mu).
Old-school computer users may remember the two basic types of memory: Random access memory (RAM) stores data currently in use by the processor, while read-only memory (ROM) is for more permanent storage. But within these categories, there are many subtypes.
An important subtype of RAM is dynamic random access memory (DRAM). A DRAM chip consists of a series of simple memory cells, each containing only one capacitor. A charged capacitor indicates one, and a discharged capacitor indicates zero. Because each memory cell is so simple, DRAM is cheap to produce and can hold large amounts of memory in a single chip. However, leaky capacitors charge quickly, so the DRAM needs to be recharged every few milliseconds, making it very power hungry.
AI computations require rapid access to more data than a single DRAM wafer can allow due to their massive data needs and high processor speeds. Fortunately, by stacking DRAM wafers vertically and adding some extra electrical connections, you can create high bandwidth memory (HBM), which gives incredible data retrieval speed for less energy.
Only three companies currently manufacture almost the entire global supply of DRAM and HBM: SK Hynix and Samsungboth from South Korea, and Micron.
As you might expect from a resource that only three companies can provide, demand for DRAM and HBM far outstrips supply. That bodes well for Micron Technology in both the short and long term.
From a short-term perspective, the company is already capturing record high revenues, and in December announced that its entire calendar year 2026 supply of HBM is already committed, with price and volume contracts complete. That’s right: Micron has already sold all of its 2026 supply before the end of 2025.