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Can Rising HBM Demand Accelerate Micron's Long-Term Revenue Growth?
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Key Takeaways
Micron is seeing strong HBM demand driven by AI workloads needing higher bandwidth and memory capacity.
MU benefits from rising memory per AI system, boosting both HBM and overall DRAM demand.
Micron expects tight supply through 2026, supporting pricing and long-term revenue growth trajectory.
Micron Technology (MU - Free Report) is witnessing rising demand for high bandwidth memory (HBM), which is becoming a major revenue growth driver for the company. Rising AI workloads to support use cases such as longer context windows, reasoning and more complex AI models are increasing the need for higher memory capacity and bandwidth. This shows that rising AI deployments will continue to boost the demand for HBM, which delivers high bandwidth at better power efficiency.
Another important driver is the increase in memory content per AI system. New AI servers are using more HBM stacks and higher-capacity memory than earlier systems. At the same time, HBM demand is also supporting growth in DDR5 and other DRAM products, as AI systems require both HBM and standard memory to function. This means HBM growth is also supporting overall DRAM demand.
Demand continues to exceed supply across memory products. In the second quarter of fiscal 2026, management stated that customer demand for 2026 and 2027 continues to rise, where current supply additions are not enough to close the gap. As of now, supply is expected remain tight beyond 2026, with meaningful capacity additions expected in fiscal 2028. This creates a supply-demand gap, which should support strong pricing and remain a key driver for the company's revenue growth.
Micron's HBM business should perform well, on the back of strong execution on HBM3E and a faster yield ramp expected for HBM4, along with improvements in HBM cost structure. With demand increasing, supply constrained and memory requirements rising in AI systems, HBM is expected to remain an important driver of Micron’s long-term revenue growth.
The Zacks Consensus Estimate for fiscal 2026 and 2027 revenues indicates a year-over-year increase of around 194.5% and 59.7%, respectively.
How Competitors Fare Against Micron
Micron competes with Western Digital Corporation (WDC - Free Report) and Seagate Technology Holdings plc (STX - Free Report) in the data storage market.
Western Digital is a leading provider of data storage solutions based on hard disk drive (HDD) technology. The company provides enterprise HDDs, which are used in data storage systems, high-performance HDD solutions that are used in desktops and laptops and HDD external storage products for personal use across cloud, client and consumer end markets.
Seagate is another leading provider of data storage solutions based on HDD and solid-state drives (SSDs). The company's HDD and SSD product portfolio includes Serial Advanced Technology Attachment, Serial Attached SCSI and Non-Volatile Memory Express-based designs, which are used in a wide range of data storage applications.
Micron’s Price Performance, Valuation and Estimates
Shares of Micron Technology have surged 58.6% in the year-to-date period compared with the Zacks Computer – Integrated Systems industry’s return of 19.8%.
Micron YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, MU trades at a forward price-to-earnings ratio of 5.4, significantly lower than the industry’s average of 10.67.
Micron 12-Month Forward P/E Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Micron Technology’s fiscal 2026 and 2027 earnings implies a year-over-year increase of 604% and 65.8%, respectively. Bottom-line estimates for fiscal 2026 and 2027 have been revised upward in the past 30 days.
View the Zacks #1 Rank List
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Can Rising HBM Demand Accelerate Micron's Long-Term Revenue Growth?
Key Takeaways
Micron Technology (MU - Free Report) is witnessing rising demand for high bandwidth memory (HBM), which is becoming a major revenue growth driver for the company. Rising AI workloads to support use cases such as longer context windows, reasoning and more complex AI models are increasing the need for higher memory capacity and bandwidth. This shows that rising AI deployments will continue to boost the demand for HBM, which delivers high bandwidth at better power efficiency.
Another important driver is the increase in memory content per AI system. New AI servers are using more HBM stacks and higher-capacity memory than earlier systems. At the same time, HBM demand is also supporting growth in DDR5 and other DRAM products, as AI systems require both HBM and standard memory to function. This means HBM growth is also supporting overall DRAM demand.
Demand continues to exceed supply across memory products. In the second quarter of fiscal 2026, management stated that customer demand for 2026 and 2027 continues to rise, where current supply additions are not enough to close the gap. As of now, supply is expected remain tight beyond 2026, with meaningful capacity additions expected in fiscal 2028. This creates a supply-demand gap, which should support strong pricing and remain a key driver for the company's revenue growth.
Micron's HBM business should perform well, on the back of strong execution on HBM3E and a faster yield ramp expected for HBM4, along with improvements in HBM cost structure. With demand increasing, supply constrained and memory requirements rising in AI systems, HBM is expected to remain an important driver of Micron’s long-term revenue growth.
The Zacks Consensus Estimate for fiscal 2026 and 2027 revenues indicates a year-over-year increase of around 194.5% and 59.7%, respectively.
How Competitors Fare Against Micron
Micron competes with Western Digital Corporation (WDC - Free Report) and Seagate Technology Holdings plc (STX - Free Report) in the data storage market.
Western Digital is a leading provider of data storage solutions based on hard disk drive (HDD) technology. The company provides enterprise HDDs, which are used in data storage systems, high-performance HDD solutions that are used in desktops and laptops and HDD external storage products for personal use across cloud, client and consumer end markets.
Seagate is another leading provider of data storage solutions based on HDD and solid-state drives (SSDs). The company's HDD and SSD product portfolio includes Serial Advanced Technology Attachment, Serial Attached SCSI and Non-Volatile Memory Express-based designs, which are used in a wide range of data storage applications.
Micron’s Price Performance, Valuation and Estimates
Shares of Micron Technology have surged 58.6% in the year-to-date period compared with the Zacks Computer – Integrated Systems industry’s return of 19.8%.
Micron YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, MU trades at a forward price-to-earnings ratio of 5.4, significantly lower than the industry’s average of 10.67.
Micron 12-Month Forward P/E Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Micron Technology’s fiscal 2026 and 2027 earnings implies a year-over-year increase of 604% and 65.8%, respectively. Bottom-line estimates for fiscal 2026 and 2027 have been revised upward in the past 30 days.
Image Source: Zacks Investment Research
Micron Technology currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.