Micron Technology Inc. (MU) has a problem that most companies would love to have: customers want far more of its products than it can possibly make. According to JP Morgan, that dynamic is set to continue well past 2026, which means Micron's pricing power should stay remarkably strong.
The bank's analyst Harlan Sur recently hosted an investor meeting with Micron's CFO Mark Murphy, Chief Business Officer Sumit Sadana, and Senior Director of Investor Relations Samir Patodia. The takeaway? Management sounded distinctly bullish on demand for both DRAM and NAND memory, noting that customers keep "upsiding" their memory and storage requirements.
Sur maintained his Overweight rating on Micron with a price target of $350, and the reasoning behind that optimism comes down to a straightforward supply-demand mismatch.
The AI Chip Boom Keeps Getting Bigger
Recent trends in GPU and XPU shipments back up the bullish memory demand story. Nvidia Corp (NVDA) continues adding to its already massive $500 billion-plus backlog for Rubin and Blackwell chips extending through the end of calendar 2026. Meanwhile, Tensor Processing Unit volumes for Broadcom Inc (AVGO) keep climbing higher, alongside JP Morgan's increased forecasts for CoWoS capacity, driven partly by expectations of stronger TPU volumes.
All of those advanced processors need memory, and lots of it. The problem for customers is that Micron simply doesn't have enough clean-room space to dramatically expand supply and meet that incremental demand.
The company expects to achieve at least 20% growth in bit shipments for both DRAM and NAND in calendar 2026 through node transitions, production efficiency improvements, and accelerated yield ramps. That sounds impressive until you realize JP Morgan expects demand growth to run at more than 30% year over year. Even with supply growth improving compared to expectations from just 90 days ago, there's still a significant gap.
Supply Constraints Lock In Pricing Power
Sur expects DRAM and HBM demand to outstrip supply beyond 2026 even as new capacity eventually comes online, a setup that should underpin continued strength in pricing. Management reiterated that Micron can only serve 50% to two-thirds of key customers' medium-term bit demand, and that imbalance will likely persist even as greenfield clean-room capacity starts production in calendar 2027.
Micron has actually pulled forward the timing of first wafer-out for its Idaho 1 fab by about one quarter to mid-calendar 2027, but management expects the ramp of that greenfield capacity to be gradual due to physical limitations rather than capital constraints. Sur noted that Micron expects competitors to face similar gradual ramp dynamics as they bring greenfield capacity online in late 2027 and 2028, all while demand continues rising.
JP Morgan believes this supply-demand tightness will support pricing strength through calendar 2026 at minimum, with the bank forecasting average DRAM pricing up almost 60% year over year in calendar 2026.
New AI Workloads Open Fresh Demand Channels
Beyond the existing AI boom, Micron sees context window memory management as a rapidly growing demand vector for NAND. Management wasn't surprised by Nvidia's CES announcement of its new Inference Context Window Storage platform because hyperscalers and others with in-house AI XPU infrastructure have already deployed, or are developing, KV cache management systems to handle rapidly growing context windows and offload from HBM and system memory.
This trend could open another major channel for NAND bit demand growth, with attach rates for Nvidia's Bluefield-4 based system likely to be high. Importantly, Micron doesn't expect KV cache offload efforts to impact customers' HBM roadmaps, which are already locked in for the next couple of years.
Sur also highlighted that Micron expects physical AI, particularly robotics, to become a massive demand driver for memory, following closely on the heels of generative AI and potentially representing a significant portion of overall industry demand in the future. Management described customer plans as "incredible" in scale. Consider this: a leading edge humanoid robot utilizes upwards of 64 to 128GB of DRAM and 1 to 2TB of NAND, with both figures likely to rise over time. Scale that across millions of units, and you're looking at significant incremental DRAM and NAND demand.
MU Price Action: Micron Technology shares were down 3.51% at $327.62 at the time of publication on Thursday. The stock is approaching its 52-week high of $346.30.
