Generative artificial intelligence (AI) software, like OpenAI’s ChatGPT, which came on the scene in late 2022, is progressing rapidly. However, even though these technologies are relatively new, they face notable limitations—particularly concerning power and memory.
The issue of power—having enough computing resources and data centers to support generative AI—has garnered significant attention. Interestingly, the memory challenge might be simpler to address. This could lead to an increase in the production of memory hardware, like random access memory (RAM) and dynamic random access memory (DRAM).
There’s one company that seems poised to lead in a particular segment of the AI sector: Micron Technology.
Based in Boise, Idaho, Micron has stepped up as a key player in the AI memory market. In the past year, the stock price has skyrocketed 277%. Given the ongoing demand for AI-specific memory, I anticipate that Micron’s growth will continue to surge.
According to reports, we might not have enough RAM to satisfy global needs this year. TrendForce analyst Tom Hsu predicts that prices for memory components could climb by 50% just in the first quarter of 2026.
Nvidia often gets the spotlight because it provides the chips that handle processing for AI applications. But for these applications to effectively learn and make sense of the data they process, they rely on memory components like those produced by Micron.
The AI memory sector is proving to be highly lucrative, prompting Micron to announce its exit from the consumer memory market to focus entirely on AI-driven memory, which has seen explosive demand.
This change, in my view, won’t negatively impact Micron’s profits. Recent growth has come, notably, from their cloud and data center sectors. In the first quarter of fiscal 2026, which concludes on November 27, 2025, Micron reported total revenue of $13.6 billion—a 57% increase year-on-year.
DRAM sales made up 79% of this quarterly revenue, showing a 69% jump from the previous year as AI continues to absorb all available memory resources.
Moreover, Micron is enjoying solid profitability from its chip sales. Currently, they report a gross profit margin of 45.3% and a net profit margin of 28.15%. The company has consistently outperformed expectations in its earnings reports for the last five quarters.
That said, Micron trades at a forward price/earnings ratio of 11.6x, which is significantly lower than the sector average of 31.1x. This implies that there’s substantial room for growth before it reaches a plateau.
Ultimately, Micron’s low P/E ratio is surprising, and it’s likely just a matter of time before the issues of memory shortages drive its sales into the spotlight on Wall Street.
While it’s already a significant player in the memory arena, given its current trajectory, it has the potential to become a leading force.
Before considering investing in Micron Technology, it’s worth noting that a team of analysts identified ten stocks with strong potential returns over the next few years—and Micron wasn’t included in that list.
In conclusion, while Micron appears to be thriving, it’s essential to approach any investment decision with due diligence.
