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Demand for artificial intelligence chips has been exceeding expectations over the past three years.
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While GPUs and custom chips still dominate capital expenditure budgets, hyperscalers are now scrambling to procure memory chips.
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Micron Technology is the market leader in high-bandwidth memory chips.
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While artificial intelligence (AI) has left its mark on every aspect of the technology landscape, perhaps no industry has been more transformative than semiconductors. Before the AI revolution, NVIDIA (NASDAQ: NVDA), TSMC (NYSE:TSM)and Broadcom (NASDAQ:AVGO) Both are viewed as cyclical chip businesses with unpredictable growth prospects.
Today, these three companies are multi-trillion dollar businesses driving the future of generative AI. GPUs, accelerators, and custom application-specific integrated circuits (ASICs) have become the hardware backbone that supports how data workloads are processed and delivered.
Smart investors are already starting to look beyond the clear winners in the AI semiconductor market and starting to look at which companies might become the next members of the trillion-dollar club.
By the end of 2026, I predict Micron Technology (NASDAQ:MU) It will become the chip stock that everyone pays attention to. Let’s take a closer look at Micron’s importance in the chip value chain and learn why the company is able to achieve explosive growth in the era of artificial intelligence infrastructure.
Perhaps the biggest impact on generative AI to date has been the introduction of large language models (LLMs) such as ChatGPT. While LL.M.s have proven extremely useful, training these text-based models is really just beginning to scratch the surface of what AI can do.
Super Scalers Like Microsoft, letter, Amazonand meta platform The ambitions go far beyond building chatbots. These companies are eyeing next-generation services featuring agent artificial intelligence, autonomous systems and robots.
These more complex applications require significant investments in inference, the ability of a trained model to make decisions. This means that AI workloads are growing at an unprecedented rate.
Against this backdrop, developers need to ensure that they supplement their GPU clusters with the resources needed to achieve smooth data transfer. Micron’s broad range of high-bandwidth memory (HBM), dynamic random access memory (DRAM) and NAND chips help alleviate data bottlenecks and ensure efficient memory and storage capabilities.
Surge in demand from hyperscalers, combined with a tight chip supply base, has driven up prices in the memory and storage markets. TrendForce research shows that DRAM and NAND chip prices may rise by 60% and 38% respectively in the first quarter.
Micron’s revenue in the first quarter of fiscal 2026 (ending November 27) was US$13.6 billion, a year-on-year increase of 57%. What’s impressive is that Micron Technology’s revenue growth is accelerating in each of its core areas: cloud memory, core data, mobile, and automotive and embedded devices. In addition, the company’s gross profit margin for each business line is at least 40% and operating profit margin is at least 30%.
Understanding these trends is important because they highlight not only that Micron’s products are in high demand, but that the company is able to generate lucrative unit economics across its operations. Considering that HBM’s total addressable market is expected to reach $100 billion by 2028, nearly three times its current size, Micron Technology’s trajectory looks absolutely explosive.
As more infrastructure capital flows from GPUs to HBM, Micron may be on the verge of a breakthrough moment similar to what Nvidia experienced in the early days of the AI revolution.
Over the past 12 months, Micron Technology generated revenue of $42 billion and earnings per share (EPS) of about $10. Wall Street is calling for strong growth over the next two years due to the current memory chip supercycle. Analysts expect Micron Technology’s revenue to more than double by fiscal 2027, while earnings per share could soar nearly fourfold.
While Micron Technology’s growth is fueled by long-term tailwinds, the company trades at a forward price-to-earnings (P/E) multiple of just 12.3. This is a meaningful discount relative to other chip leaders in their respective verticals. For example, throughout the AI revolution, NVIDIA, TSMC, and Broadcom all traded at P/E ratios ranging from 30 to nearly 60.
Although Micron Technology is not a direct competitor of these companies, this benchmark shows how adjacent suppliers in the chip market are commanding significant premiums given their importance to AI.
Since Micron Technology’s revenue and earnings profile are expected to accelerate significantly over the next few years, I believe the company’s valuation is poised to expand significantly.
Based on a forward price-to-earnings ratio of 23 times (which can still be considered a discount), Micron Technology has an implied market value of approximately $850 billion. As more investors realize the integral role Micron plays due to increased demand for memory chips, I think a forward P/E ratio of 30x is entirely reasonable. By then, Micron Technology will be valued at US$1 trillion.
Considering that AI infrastructure is a multi-year, multi-trillion dollar opportunity that’s just getting started, I think Micron stock is a compelling long-term stock to buy and hold in 2026 — all with clear value.
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Adam Spatacco has worked at Alphabet, Amazon, Meta Platforms, Microsoft and Nvidia. The Motley Fool owns and recommends Alphabet, Amazon, Meta Platform, Micron Technology, Microsoft, Nvidia and TSMC. The Motley Fool recommends Broadcom and recommends the following options: Buy $395 Microsoft calls in January 2026, and buy $405 Microsoft calls in January 2026. The Motley Fool has a disclosure policy.
Prediction: This will be the next artificial intelligence (AI) chip stock to join Nvidia, TSMC and Broadcom in the trillion-dollar club (hint: not AMD) Originally published by The Motley Fool