Stock of the Week: Micron - Riding the Memory Cycle
Strong pricing, improving margins and AI-led demand tailwinds
Welcome to “Stock of the Week”, a recurring series focused on companies experiencing meaningful news flow or changes in their investment case. The objective is not to react to headlines but to understand what is happening beneath the surface and whether recent developments materially affect the long-term investment thesis.
Each article applies the Quality Stocks Investment Framework to assess business quality, return potential and execution, in order to determine whether the stock is Attractive, Conditional, or Unattractive at the current price. A standardized one-pager accompanies each edition to make the decision process clear and easy to follow.
For paid subscribers, Stock of the Week goes a step further by opening up the full reasoning behind the investment thesis and decision process:
Detailed TSR calculations, including all underlying assumptions. This allows investors to understand what must go right for the investment to deliver acceptable returns and to stress-test their own expectations against explicit inputs
My analysis beyond the overall verdict. This provides a deeper insight, enabling investors to form an independent view rather than relying solely on a conclusion
For this week’s edition, the focus is on Micron, a leading player in the memory semiconductor industry. After a 10% performance on the first trading day of 2026, let’s analyze what happened!
One Pager
The stock at a glance
Recent news
AI is driving an explosion in memory demand because modern models are both data-hungry and memory-intensive. Training and running large language models requires storing massive model parameters, activations and datasets, while moving data continuously between processors and memory at very high speeds. As models scale in size, memory capacity per accelerator and bandwidth per chip must increase in tandem, making memory a potential bottleneck. This has led to sharply rising demand for advanced DRAM (especially HBM - high bandwidth memory) alongside higher overall memory content per server, structurally lifting memory demand beyond traditional compute-driven cycles.
Micron, as one of the 3 major HBM suppliers alongside Samsung and SK Hynix, has sold out its entire HBM production capacity for calendar 2026 (fiscal year 2026 and H1 2027) under committed multi-year contracts, providing exceptional revenue visibility
The company reported record fiscal Q1 2026 revenue of $13.6B (up 57% YoY), with DRAM revenue leading the growth, followed by guidance for Q2 revenue of approximately $18.7B implying over 130% YoY revenue growth
Industry supply growth for DRAM and NAND is projected at approximately 20% for calendar 2026, constrained by limited fab expansions, long lead times for new capacity and the resource-intensive nature of HBM production (which consumes 3-4x more wafer capacity per bit than standard DRAM). This modest supply increase significantly lags behind AI-driven demand growth, estimated at 30-40% overall
The resulting shortages grant suppliers like Micron strong pricing power, with recent HBM price hikes of nearly 20% for 2026 deliveries and expectations for double-digit quarterly price rises in conventional DRAM throughout 2026
Recent analyst recommendation updates
January, 02. Bernstein. Buy. $270 —> $330
January, 02. Daiwa. Buy. $200 —> $350
December, 18. Rosenblatt Securities. Buy. $300 —> $500
December, 18. Raymond James. Buy. $190 —> $310
To go beyond the initial assessment, paid subscribers unlock the detailed TSR calculation with underlying assumptions and my analysis of the situation, providing deeper insight into how recent developments affect risks, opportunities and the overall verdict.
