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Bloomberg <\/p>\n Bloomberg <\/p>\n
(Bloomberg) — Soaring prices for memory chips have made Micron Technology Inc. one of the standout stocks of 2026, and its earnings after the close on Wednesday will give clues on whether the rally is sustainable.<\/p>\n
Micron shares have soared 63% to start the year, among the best performers in the S&P 500 Index, after jumping 239% in 2025. The biggest US maker of memory chips is benefiting from heavy spending on artificial intelligence computing that\u2019s driving demand for memory and storage components, as are high-flying peers Sandisk Corp. and Western Digital Corp.<\/p>\n
Most Read from Bloomberg<\/p>\n
Investors are optimistic that elevated prices for memory chips will bolster Micron\u2019s quarterly results and forecasts. But there are questions about how long the good times will last and whether Micron can live up to expectations.<\/p>\n
\u201cThis pricing environment won\u2019t last forever, but all signs are pointing to tight supply this year and sold-out capacity next year, so investors can take some comfort that we\u2019re not close to the peak yet,\u201d said Hendi Susanto, a portfolio manager at Gabelli Funds, which has about $35 billion in assets and holds Micron shares. \u201cBecause prices look sustainable in the near term and the stock looks pretty cheap, its hard to see significant downside. The biggest risk is probably high expectations.\u201d<\/p>\n
Shares were up 0.8% in midday trading on Wednesday.<\/p>\n
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While other AI infrastructure stocks like Nvidia Corp. have stalled out amid concerns about the sustainability of spending and peaking revenue growth, memory and storage companies continue to climb. Part of that is due to the higher prices they\u2019re able to command as supply remains constrained. An index of spot prices for the dynamic random access memory chips that Micron makes is up more than 500% since the end of September.<\/p>\n
Micron shares closed at a record $461.69 on Tuesday, bringing the company\u2019s market value to about $520 billion, up from $100 billion at the end of 2024.<\/p>\n
The Boise, Idaho-based chipmaker is expected to deliver fiscal second-quarter net income of $10.1 billion on revenue of $19.6 billion, according to the average of analyst estimates compiled by Bloomberg. That would represent growth of 540% and 144%, respectively, from a year ago.<\/p>\n
The memory industry has long been prone to booms followed by brutal busts. Micron lost money as recently as the first quarter of 2024 amid slumping prices. But the magnitude of the current spending and the deep pockets of the companies behind it is expected to make this cycle bigger and longer lasting. And the difficulty of adding significant production capacity has Wall Street betting that memory prices won\u2019t fall anytime soon.<\/p>\n
Amazon.com Inc., Microsoft Corp., Alphabet Inc. and Meta Platforms Inc. are projected to plow $618 billion combined into capital expenditures in 2026, up from $376 billion in 2025. That demand should help memory prices \u201cstay elevated at least through 2027,\u201d Bernstein analyst David Dai wrote in a note to clients on March 16.<\/p>\n
That said, the pace of Micron\u2019s expansion is expected to cool rapidly in the coming years. Revenue growth is projected to be 116% in fiscal 2026, which ends in August, followed by 36% in fiscal 2027. In 2028, revenue is expected to decline 1%. In addition, there\u2019s the risk of the war in Iran choking off key supplies for the semiconductor industry, including helium.<\/p>\n
Micron\u2019s relatively inexpensive stock price is helping to keep investors optimistic that the rally has legs. At less than 10 times estimated earnings, the shares are trading below their 10-year average of multiple of 16 and less than half the valuation of the tech-heavy Nasdaq 100 Index and the Philadelphia Stock Exchange Semiconductor Index.<\/p>\n
Micron\u2019s growth outlook and pricing power are reasons to be confident in its multiple, according to Larry Tentarelli, chief technical strategist for Blue Chip Daily, who added that the shares don\u2019t look over-extended going into the earnings report.<\/p>\n
\u201cMicron\u2019s probably a $500 stock, but the big caveat is they just have to deliver,\u201d he said. \u201cIf there\u2019s a group of stocks I want to be long into earnings, it\u2019s these memory stocks.\u201d<\/p>\n
Tech Chart of the Day<\/p>\n
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Top Tech Stories<\/p>\n
Alibaba Group Holding Ltd. is raising prices for its AI computing and storage products by as much as 34%, in response to demand and rising infrastructure costs.<\/p>\n
Samsung Electronics Co. is considering a shift toward multi-year contracts for memory chips, a much longer timeframe than is typical that may help stabilize supply and ease concerns about a shortage of the essential components.<\/p>\n
Nvidia Corp. Chief Executive Officer Jensen Huang said the company is firing up manufacturing of H200 AI accelerators for customers in China, a sign of progress in the chipmaker\u2019s effort to reenter the vital market.<\/p>\n
Swarmer Inc. shares skyrocketed as much as 700% on Tuesday, making the artificial intelligence drone software company\u2019s debut the best trading by a US stock since Newsmax Inc.\u2019s blockbuster entry nearly a year ago.<\/p>\n
Earnings Due Wednesday <\/p>\n
Earnings Premarket:<\/p>\n
Earnings Postmarket:<\/p>\n
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–With assistance from Carmen Reinicke, Subrat Patnaik and David Watkins.<\/p>\n
(Updates to midday trading.)<\/p>\n
Most Read from Bloomberg Businessweek<\/p>\n
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