By Geoffrey Seiler
Publication Date: 2026-01-20 15:13:00
Micron looks poised to outperform in 2026.
When it comes to artificial intelligence (AI) chips, Nvidia (NVDA 3.19%) has long been the king with its graphics processing units (GPUs). These powerful chips are used to train large language models (LLMs) and run AI inference. However, to perform at their best, these chips need something called high-bandwidth memory (HBM).
HBM is a specialized form of DRAM (dynamic random access memory) that can help GPUs store data while moving it faster and using less space through a process called 3D stacking. Given the importance of HBM in helping improve the performance of AI chips, demand for HBM, not surprisingly, has been through the roof. At the same time, HBM requires three to four times the wafer capacity of run-of-the-mill DRAM, which is creating a supply shortage throughout the DRAM industry. This is leading to prices for DRAM soaring.
Image source: Getty Images.
Micron: A DRAM leader
One of the companies best positioned to take advantage of this market dynamic is Micron Technology (MU +2.06%). Micron is a DRAM leader and also participates in the NAND (flash memory) market, which is also seeing supply shortages and soaring prices. DRAM currently makes up around 80% of its revenue and NAND 20%.
The current environment is leading the company to see both surging revenue growth and huge margin expansion. For its fiscal first quarter, it saw its revenue jump 57%, and its adjusted EPS soar nearly 2.7 times to $4.78, as its adjusted
