Is Micron’s AI Gold Rush a Perfect Storm?

Micron Technology soared by more than 42.98% over the last 30 days, a jaw-dropping rally even by tech’s feverish standards. The reason? Artificial intelligence and specifically, the voracious appetite for memory chips powering the world’s new AI data centers.

But beneath the surface of the AI euphoria, do the fundamentals justify the soaring share price?

Key Points

• Micron’s stock surged 40% as AI data centers snapped up its HBM chips, with nearly all 2026 supply already sold out.

• Prioritizing HBM has created a DRAM shortage, driving prices higher and margins above 45%, with more gains expected.

• Despite a low P/E of 11, memory markets boom and bust — and an AI overbuild could trigger the next downturn.

Why AI Is Sucking the Market Dry

Artificial intelligence models devour memory bandwidth. Every token generated by a large language model triggers billions of data fetches, which is why High-Bandwidth Memory has become the hottest commodity in semiconductors.

Micron’s HBM3 chips, which sit right next to Nvidia’s GPUs inside advanced AI servers, are selling out faster than the company can make them. In fact, nearly all of Micron’s 2026 supply is already booked.

In the most recent quarter, Micron sold roughly $2 billion worth of HBM chips, a staggering jump from virtually zero a year earlier. Demand is being fueled by hyperscalers like Oracle, OpenAI, and Microsoft, all racing to expand GPU clusters before competitors grab available capacity.

DRAM Tightness Is Back

By prioritizing HBM production, which is vastly more profitable, Micron and rivals like Samsung and SK Hynix have inadvertently restricted supply of traditional DRAM chips used in PCs, smartphones, and standard servers.

Even though consumer demand remains tepid, the supply imbalance is enough to push DRAM contract prices up by as much as 20% year-over-year. Micron’s average selling prices have climbed sharply, fattening margins across its portfolio.

As a result, Micron’s fourth-quarter revenue jumped by nearly 50% year over year to over $11 billion, while non-GAAP gross margin ballooned to over 45%.

For context, Micron’s gross margins have averaged under 40% for most of the past decade. The company is now operating at profitability levels more akin to Nvidia in its early AI breakout phase.

Why Micron Still Looks Cheap (and Why That’s a Trap)

On paper, Micron’s valuation looks downright attractive. The stock trades around 24x earnings, a fraction of what most AI names command.

But that’s exactly the trap investors often fall into with memory stocks. Micron’s business is cyclical by nature, and every boom has historically been followed by a bust. When the industry overbuilds capacity, and it always does, prices collapse, profits vanish, and balance sheets get bruised.

AI infrastructure overbuild is a concern but with forward earnings just north of 10x, it’s hard to ignore now.

How Micron Might Break the Cycle

There is, however, one thing that’s different this time. Unlike in prior cycles, the number of players capable of producing advanced HBM is tiny, essentially three companies, being Micron, Samsung, and SK Hynix.

Each is using TSMC’s CoWoS packaging capacity, which is also limited. That means the usual oversupply flood may not happen as quickly. In fact, industry analysts from TrendForce estimate that global HBM output can grow only about 60% annually through 2027, far below the projected 100%+ demand growth for AI compute.

That dynamic could give Micron an unusually long runway before the next downturn. Add in its $11 billion Idaho fab expansion and U.S. CHIPS Act incentives, and the company’s structural costs are likely to improve, meaning the next trough might not be nearly as painful as past ones.

The Bottom Line

Micron is riding the most powerful demand wave in its history. Its technology is essential to AI, its supply is sold out well into 2026, and its margins are surging.

But investors shouldn’t forget the lesson every memory cycle teaches: what goes up, eventually comes down. When that happens, and it always does, the winners are those who got in early and got out before the music stopped.

For now, Micron’s music is still playing, loudly. Just make sure you’re near the exit when it does.