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Micron technology (UM) has exhausted its high-bandwidth memory capacity through 2026. Micron can only meet 50% to 66% of customer demand.
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Micron forecasts second-quarter fiscal 2026 revenue of $18.7 billion, up 132% year over year.
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Micron trades at 9.6x forward earnings versus 25x the industry average despite forecast annual earnings growth of 70%.
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The artificial intelligence (AI) revolution has sparked a new wave of high-performing investments, including Nvidia (NASDAQ:NVDA), become the face of the industry, while Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL) has advanced its position in the field, surpassing its competitors with the release of Gemini 3 in November. Other companies, such as Advanced microdevices (NASDAQ:AMD), have also benefited from the growing demand for AI hardware.
Yet there is one stock that stands out as perhaps the cheapest AI stock on the market with the best hypergrowth opportunity: Micron technology (NASDAQ:MU). Although its stock is up more than 250% in the past year, it still trades at valuations that suggest it is heavily discounted given its role in supplying AI memory.
Micron produces dynamic random access memory (DRAM) and NAND flash memory chips essential for data storage and processing. The company designs, manufactures and sells these components worldwide, focusing on high-performance solutions for data centers, mobile devices and automotive applications. Its high-bandwidth memory products support AI accelerators, enabling faster data management in systems from Nvidia and others.
This positions Micron to power the expansion of AI data centers, where demand for memory is increasing. The company’s high-bandwidth memory capacity will be exhausted through 2026, reflecting tight supply amid growing AI workloads. Industry forecasts indicate that DRAM shortages will extend well beyond 2026 as AI applications consume more wafer capacity than traditional uses.
Micron has more business than it can handle due to a lack of available cleanroom space, leaving it able to handle only 50% to 66% of its key customers’ mid-term demand. Even though more cleanroom capacity will begin to come online in 2027, demand is still expected to outstrip supply.
The memory maker has about 21% market share in high-bandwidth memory, behind SK Hynix while benefiting from the insatiable demand for AI.
Micron’s inventory constraints highlight its market influence. High-bandwidth memory – essential for AI chips – requires three times the production area of standard memory, limiting production. Micron has confirmed that its entire supply of high-bandwidth memory for 2026, including the next generation HBM4, is already allocated. This scarcity leads to higher prices and margins as the company shifts resources away from consumer products to meet demand for AI. It is targeting about 20% growth in DRAM and NAND shipments this year.