Graphics processing units (GPUs) are the main data center chips used in artificial intelligence (AI) development. Powered by the best GPUs in the industry Nvidia and Advanced Micro Devicesand both of these companies are sourcing an important component called High Bandwidth Memory (HBM). Micron Technology(NASDAQ: MU ).
Micron’s HBM solutions are installed with advanced GPUs, where they maintain uninterrupted data flow to unlock maximum processing speed. The company is currently experiencing astronomical demand, which is increasing its revenue and earnings. As a result, its stock has gained a whopping 323% in the past 12 months alone.
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But does the skin’s comeback last?
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GPUs require a constant flow of data when training AI models and serving them to end users. HBM stores this data in a ready state when the GPU needs it, and the higher the memory capacity, the more data can be stored in the pipeline. Conversely, low memory capacity will cause bottlenecks, forcing the GPU to halt its workload while it waits to receive updates.
Micron’s HBM3E solution for the data center offers 50% more capacity than the competition, while consuming 30% less energy. This is a winning combination for AI developers who want the fastest processing speed and the lowest possible cost.
But Micron will ramp up production of its new HBM4E solution this year, which will offer 60% more capacity than the HBM3E, while consuming 20% less energy. It is expected to power Nvidia’s new Vera Rubin chips, which will be the most powerful in the world for AI workloads when they enter mass production in the second half of 2026.
Micron’s entire 2026 data center HBM supply is already completely sold out, but the opportunity is only growing. The market was worth $35 billion in 2025, and the company says it will grow 40% annually until 2028, reaching $100 billion.
Micron ended the second quarter of fiscal 2026 at the end of February, and is scheduled to report its operating results for the period on March 18. Based on management’s guidance, the company’s total revenue is expected to reach $18.7 billion, which would be 132% more than last year’s quarter. That would be a significant acceleration from the 56% growth it produced in the first quarter, just three months ago.
Micron’s cloud memory segment (where it reports data center HBM sales) was the star of the show in the first quarter, with revenue nearly doubling year-over-year to $5.3 billion. I would expect a strong result on March 18, based on management’s overall top-line forecast.
The next big thing to watch on March 18 is Micron’s earnings, which are expected to rise by 480% year-over-year to $8.19 per share. As was the case with the top line, this would be a big jump from the 175% growth the company generated in the first quarter.
Earnings drive stock prices, so this number — along with management’s forecast for the next quarter — could indicate whether more gains are ahead for Micron shareholders.
The semiconductor industry has always been very cyclical, meaning companies would spend a lot of money building infrastructure and then pull back for a few years, until it was time to upgrade. AI has shortened this upgrade cycle to 12 months — or less in some cases — so data center operators are Incessantly spending money
In fact, Nvidia CEO Jensen Huang believes that data center operators will spend up to $4 trillion annually on AI infrastructure by 2030 to meet demand for cloud computing capacity from developers. Most of those costs will be passed on to chipmakers, and if you believe Nvidia will continue to sell truckloads of GPUs, it’s only logical to boost Micron’s business, given that HBM is a key piece of the puzzle.
Based on Micron’s trailing-12-month earnings per share of $10.52, its stock trades at a price-to-earnings (P/E) ratio of 36.6, which is roughly in line with Nvidia’s P/E. From this point of view, one could argue that Micron is probably a reasonable value.
But here’s where things get interesting. Wall Street consensus estimates (provided by Yahoo Finance) suggest that Micron’s full-year fiscal 2026 earnings will come in at $34.16 per share, placing its stock on a trailing P/E ratio of just 11.3.
Data by YCharts.
This means that the stock must have rocket In the next six months it could rise another 223% just to maintain the current P/E ratio of 36.6.
I’m not suggesting this will happen, as there are certainly risks on the horizon. For example, leading startup OpenAI recently said it will cut its planned infrastructure spending to $600 billion between now and 2030, down from $1.4 trillion previously. If this becomes an industry-wide phenomenon, Huang’s prediction may be too smart.
However, there is certainly room for upside in Micron stock as things currently stand. It may not be three times In the next six months, but I wouldn’t be surprised if it’s much higher.
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Anthony DiPizio has no position in any of the listed stocks. The Motley Fool has and offers positions in Advanced Micro Devices, Micron Technologies, and Nvidia. Motley Fool has a disclosure policy.
How high can Micron stock go? Originally published by Motley Fool
