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Micron Technology produces DRAM and HBM memory chips that are critical for artificial intelligence computing.
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The company has until the end of 2025 to sell out its entire 2026 inventory of such chips.
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Despite the sharp rise in its stock price, Micron Technology’s valuation remains reasonable.
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10 stocks we like better than Micron Technology ›
When you think of artificial intelligence (AI) semiconductors, you tend to think of graphics processing units (GPUs) from companies like NVIDIA (NASDAQ: NVDA) Perform the actual calculations required for artificial intelligence.
But not all semiconductor chips are the same, and not all chips are made by Nvidia. In fact, some of the most important resources of an Nvidia GPU are the memory chips that keep data accessible. The memory chip company that is quietly becoming the cornerstone of the artificial intelligence boom is Micron Technology (NASDAQ:MU).
Old-school computer users may remember two basic types of memory: random-access memory (RAM), which stores data currently being used by the processor, and read-only memory (ROM), which is used for more permanent storage. But within these categories, there are many sub-genres.
An important subtype of RAM is dynamic random access memory (DRAM). DRAM chips are made up of a series of simple memory cells, each containing just a capacitor. A charged capacitor represents a “1” and a discharged capacitor represents a “0”. Because each memory cell is so simple, DRAM is cheap to produce and can fit a large amount of memory into a single chip. However, capacitors leak charge quickly, so DRAM needs to be charged every few milliseconds, making it very energy-hungry.
Due to massive data demands and high processor speeds, AI computing requires rapid access to more data than a single DRAM wafer can allow. Fortunately, by stacking DRAM wafers vertically and adding a few extra electrical connections, you can create high-bandwidth memory (HBM) that delivers incredible data retrieval speeds with lower power consumption.
There are currently only three companies producing nearly the entire global supply of DRAM and HBM: SK Hynix and Samsungboth from South Korea and Micron.
As you would expect with resources that only 3 companies can provide, demand for DRAM and HBM far exceeds supply. This is good for Micron Technology in both the short and long term.
In the short term, the company has posted record revenue and announced in December that its HBM supply for calendar year 2026 is fully committed, with both price and volume contracts completed. That’s right: Micron Technology has sold out its entire 2026 supply by the end of 2025.
