So, what's going on with Micron Technology Inc. (MU)? It's a classic case of a good old-fashioned supply and demand story, but with a very 2024 twist: artificial intelligence is the hungry customer, and Micron makes the snacks it can't get enough of.
The stock moved higher again Friday as investors doubled down on what's being called the "AI memory trade." The thesis is straightforward. The next generation of AI and high-performance computing needs a special kind of memory, particularly high-bandwidth memory (HBM). Everyone wants it. But there's only so much to go around. That's a fantastic position for a supplier to be in.
This isn't just a short-term blip. The thinking among analysts and big money managers is that demand for this AI-focused memory could outpace supply well into the future—we're talking about the rest of this decade. That kind of dynamic doesn't just support sales; it sustains pricing power. When you're the one with the scarce, must-have component, you get to call the shots on price, and that directly supports a company's growth and profit outlook for a long time.
The conviction is showing up in some serious money moves. Take David Tepper's hedge fund, Appaloosa Management. Recent filings show it increased its stake in Micron by a whopping 250%. Even more interesting is what it did alongside that bet: it trimmed its exposure to two other AI darlings, Nvidia Corp. (NVDA) and Amazon.com, Inc. (AMZN). That's a pretty clear signal about where one savvy investor sees compelling value and momentum in the tech stack right now.
Why Analysts Think The Good Times Can Keep Rolling
JPMorgan analyst Harlan Sur recently laid out the bull case. He reiterated an Overweight rating and a $350 price target, arguing that AI-driven demand for DRAM (and HBM specifically) is likely to keep exceeding supply even beyond 2026. In finance-speak, that's a long runway.
"Micron remains constrained in its ability to grow supply and meet incremental customer demand because it lacks available clean-room space," Sur noted. That might sound like a problem, and it is a capacity challenge. But in the context of overwhelming demand, a supply constraint is also what protects those fat margins. They can't just flip a switch and flood the market, which keeps the scarcity—and the pricing power—intact.
The plan to grow isn't about building vast new factories overnight. Instead, Sur points to "node transitions, production efficiency improvements, and accelerated yield ramps"—the nitty-gritty work of making more chips from the factories you already have. He believes these efforts should collectively drive at least 20% growth in bit shipments for both DRAM and NAND memory in calendar 2026.
The market has already voted with immense enthusiasm. Let's look at the scoreboard. Over the past 12 months, Micron shares have skyrocketed more than 332%. Compare that to the PHLX Semiconductor Index, which is up a very respectable 61%. Zoom in to the last three months, and Micron is still lapping the field: up over 106% versus the index's 29% gain. The broader Nasdaq 100 is up about 15% in a year and 3% over three months. Micron isn't just participating in a tech rally; it's leading one of the hottest subsectors within it.
On Friday, the momentum continued. Micron shares were up 1.70% at $424.43, inching closer to its 52-week high of $455.50. The story of AI, memory, and tight supply has become one of the most compelling narratives in the market. And for now, Micron is sitting right in the middle of it.
