Behind every AI company is a memory supplier working overtime to keep up with demand. That’s why Micron Technology (name: mu)computer memory manufacturer, may be the biggest surprise of 2026.
Of course, we know that Micron’s stock has increased by more than 260% over the last 12 months, but the surprise is that the company will be in the driver’s seat for high bandwidth memory (HBM) for years to come. Micron specializes in this type of memory which is vital for artificial intelligence processing. Supply is so far outstripping demand that Micron is already completely sold out by 2026.
Memory is essential to the cognitive function of AI. According to Micron’s latest investor presentation, AI relies heavily on advanced memory for real-time contextual processing. This has applications from AI data centers to self-driving cars and even medical diagnostics.
In its fiscal first quarter 2026 earnings, Micron reported that revenue rose 57% year over year to $13.6 billion. Gross margin was nearly 57%, but the company anticipates expanding to 68% in Q2. This top-line growth means greater profitability and potentially higher rewards for shareholders through stock buybacks and dividends. In the past few years, Micron has spent $1 billion to buy back 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% until 2028. Micron expects the total addressable market to reach $100 billion by then. That milestone could be reached two years earlier than Micron originally anticipated.
Of equal importance is the leverage that Micron has in pricing HBM. Since supply is so limited, Micron can capitalize on unprecedented demand and raise prices accordingly.
The biggest risk for Micron right now is a disruptive market for HBM. If the general plateaus or the adoption of AI declines, it will have a direct impact on Micron. This seems somewhat unlikely, as the company is making plans to open new plants and expand existing ones in order to fulfill customer orders.
Micron’s stock is up 38% year to date as of January 22nd. Even with this substantial price increase so early in the year, Micron is still fairly valued. Its forward price-to-earnings ratio (P/E) is currently around 12. This multiple is much lower than the tech industry average, which ranges in the mid-20s. The company’s market cap has exploded to more than $400 billion as of January 22.