Micron’s Gambit: A Memory of Things to Come

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Micron Technology, a name that, for the uninitiated, conjures images of microscopic landscapes and the fleeting persistence of digital thought, has lately enjoyed a rather flamboyant ascent. Nearly a threefold increase in valuation over the past annum—a performance that, one suspects, has induced a certain giddy enthusiasm amongst its shareholders. The company, purveyor of both DRAM and NAND, finds itself, as it were, at the crest of a wave, a swell born of the insatiable appetite of the modern computational beast. A shortage, you see, a deliciously inconvenient scarcity, has been its unlikely benefactor.

The recent pronouncements from Micron—a commitment, a veritable pledge, to unleash upwards of two hundred billion dollars upon the construction of memory fabrication facilities, primarily within the borders of the United States, with further disbursements destined for more distant shores—have understandably generated a chorus of optimistic pronouncements. But a seasoned observer—one who has witnessed the cyclical nature of this industry with a detached, almost entomological curiosity—cannot help but perceive a subtle discord, a hint of precariousness beneath the veneer of prosperity.

Is this monumental expenditure, this industrial leviathan taking shape, a harbinger of future riches, or a cautionary tale etched in silicon? The market, presently captivated by the spectacle, seems content to suspend its disbelief. But a prudent investor—one who prefers to contemplate the abyss rather than leap into it—might benefit from a more circumspect appraisal.

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An Acceleration of Intent

Last summer, a curious shift occurred. The artificial intelligence industry, that most capricious of muses, transitioned from the laborious phase of training to the more immediate demands of inference. Large hyperscalers—those behemoths that house our digital selves—began to announce ambitious projects, all dedicated to serving the insatiable appetites of AI laboratories like OpenAI and Anthropic. The result, predictably, was a surge in demand for memory—a demand that, unlike many ephemeral trends, has proven remarkably persistent.

Counterpoint Research, a firm that traffics in such granular data, reports that prices for both memory and NAND storage have surged by over ninety percent in the first quarter alone, with a further twenty percent increase forecast for the subsequent period. A rather exhilarating statistic, wouldn’t you agree? It suggests a market operating not merely at capacity, but at a fever pitch.

Micron, responding with admirable alacrity, has accelerated its DRAM fab expansion plans. Two new facilities are planned for Idaho, the company’s ancestral home, representing a combined investment of fifty billion dollars. A further one hundred billion is earmarked for a sprawling complex near Syracuse, New York. And, as if that weren’t enough, another fifty billion is allocated to research and development. A grand total of two hundred billion dollars—a sum that, when contemplated, borders on the fantastical.

To complete the tableau, Micron has also announced a near-ten billion dollar investment in Hiroshima, Japan, and expressed its intention to acquire an existing fab in Taiwan. A global ambition, executed with a boldness that, one might say, is either visionary or recklessly optimistic.

These U.S. investments, announced last June, were initially framed as a commitment to reshoring forty percent of Micron’s DRAM manufacturing. However, given the subsequent, rather dramatic, increase in memory prices, it appears the company is accelerating its plans for the second Idaho fab. A swiftness of execution that, while commendable, might also be interpreted as a touch of impatience.

The Spectre of a Bust

Why, one might ask, should Micron’s ambitious plans induce a frisson of unease? Surely, an increased capacity for chip production translates directly into increased profitability? The logic appears irrefutable. Yet, the history of cyclical companies—those creatures of boom and bust—is littered with cautionary tales. Amidst rising prices, these companies often succumb to the temptation of increased investment, seeking to expand supply. However, shortages frequently lead to a phenomenon of double- and triple-ordering, artificially inflating demand. When the new supply finally arrives, demand inevitably ebbs, leading to a glut and, ultimately, a price crash.

Consider the COVID-19 pandemic. The stay-at-home boom, so beneficial to memory demand, was followed by one of the more severe busts in the industry’s history, triggered by the pandemic’s end and the subsequent rise in interest rates. A rather stark reminder of the industry’s inherent volatility.

Therefore, is Micron and the memory players setting themselves up for an epic crash? The question, while perhaps overly dramatic, deserves careful consideration.

A Different Kind of Bloom?

There are, however, mitigating factors. Micron shareholders might be justified in maintaining their positions, for two primary reasons. First, the current AI boom may be qualitatively different from previous technological surges. Second, Micron may earn a substantial portion of its entire market capitalization in a relatively short period, before these new fabs even have a chance to alleviate the undersupply.

The current AI boom, you see, is predicated on a novel type of DRAM, known as high-bandwidth memory (HBM). This technology, composed of stacked DRAM modules connected via through-silicon vias, represents a significant leap forward in memory architecture.

Demand for HBM currently appears inelastic—meaning that, within reason, AI leaders will continue to purchase it in massive quantities, regardless of the price. A rather unusual phenomenon, and one that suggests a fundamental shift in the dynamics of the memory market.

HBM also requires three to four times the capital equipment per bit to produce than traditional DRAM. Consequently, it is far more difficult to dramatically increase HBM supply. DRAM companies have shifted some equipment from traditional DRAM to HBM, but this has only reduced the supply of traditional DRAM, which is also experiencing increased demand from AI diffusion into PCs, phones, and inference applications. A rather intricate web of dependencies, wouldn’t you agree?

This combination of inelastic demand and increased capital intensity has made it structurally harder to increase supply, unless new fabs are built—a process that will take at least two years, with volume supply ramps taking even longer. The emergence of HBM, therefore, has made this boom, perhaps, genuinely different.

Earnings Before Reality

Analysts expect Micron to earn $33.92 per share this fiscal year and $44.55 per share in fiscal 2027. However, these are merely average estimates—figures that Micron, given its recent performance, is likely to exceed. The highest estimates for 2026 and 2027 are $41.89 and $63.01 per share, respectively. With the stock currently trading around $415, these two years of earnings alone could exceed 25% of Micron’s current market capitalization. A rather astonishing prospect.

Furthermore, there is no guarantee that the supply coming online in 2028 will drive prices back down to former levels. Even if prices per bit decline somewhat, Micron will also be selling more bits. Consequently, one can envision Micron’s earnings flattening out, but not crashing, even when new supply arrives. A rather optimistic scenario, but one that, given the current dynamics, is not entirely implausible.

A Single Condition

The bullish scenario outlined here, of course, is predicated on the continued strength of demand for HBM. The inelastic nature of that demand and its capital intensity are the keys to this new normal in the memory markets. Therefore, if the industry develops a lower-cost alternative to HBM, or if AI scaling hits a wall—meaning there is less incremental AI improvement with additional compute—that could throw a wrench into Micron’s bull case.

These are two risks to watch out for. However, as of today, neither risk appears imminent. Consequently, investors can continue to hold Micron stock with confidence—at least for the time being. The game, as always, is afoot.

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2026-02-22 14:33