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Will AI Servers Keep Micron's DRAM Demand Momentum Strong?
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Key Takeaways
Micron's Q2'26 revenues soared 196% YoY to $23.86B, driven by AI-focused DRAM demand.
MU's DRAM revenues jumped 207% YoY to $18.8B and accounted for 79% of total sales as prices rose mid-60%.
Micron sees high-teen DRAM bit demand growth in 2026, while limited new capacity until fiscal 2028.
Micron Technology, Inc. (MU - Free Report) appears well-positioned to benefit from the rapid expansion of artificial intelligence (AI) infrastructure, which is creating a powerful demand driver for DRAM (Dynamic Random-Access Memory). AI servers require significantly more memory than traditional servers, making DRAM one of the most critical components in modern data centers.
Micron Technology’s recent results highlight the strength of this demand. In the second quarter of fiscal 2026, the company reported revenues of $23.86 billion, up nearly 196% year over year and 75% sequentially. Growth was fueled by strong demand for DRAM products, particularly high-bandwidth memory (HBM) and server DRAM used in AI systems.
The company has also indicated that demand continues to exceed supply across much of the memory market. During the second quarter, DRAM revenues jumped 207% year over year and 74% sequentially to $18.8 billion and accounted for 79% of total revenues. The robust sequential increase was mainly driven by mid-single-digit growth in bit shipments and a mid-60s percentage rise in average selling prices.
AI models are becoming larger and more complex. Training and inference workloads require massive amounts of memory capacity and bandwidth. As a result, memory content per AI server continues to rise. Micron Technology’s forecasts point to high-teens percentage DRAM bit demand growth in 2026, supported by hyperscaler investments in AI infrastructure and cloud computing.
Supply conditions further strengthen Micron Technology’s outlook. New DRAM capacity additions are limited, and meaningful output from expansion projects is not expected until fiscal 2028. This creates a favorable supply-demand balance that supports both volume growth and pricing. The memory chip maker is also benefiting from advanced DRAM technologies, including HBM4 and next-generation process nodes, which improve performance and profitability. These products are increasingly important in AI systems.
Current AI spending trends suggest that DRAM demand could remain strong through 2027. The Zacks Consensus Estimate for fiscal 2026 DRAM revenues is pegged at $85.97 billion, indicating a whopping 201% year-over-year surge.
AI Infrastructure Leaders Support MU’s DRAM Demand Growth
Two key companies tied to Micron Technology’s AI-driven DRAM opportunity are NVIDIA Corporation (NVDA - Free Report) and Advanced Micro Devices, Inc. (AMD - Free Report) . While neither produces DRAM, both are major drivers of memory demand through their AI accelerator businesses.
NVIDIA remains the dominant force in AI servers. In the most recently reported results for the first quarter of fiscal 2027, the company’s data center revenues jumped 92% year over year and 21% sequentially to $75.25 billion, reflecting extraordinary demand for its AI graphics processing units (GPUs). Each new generation of NVIDIA AI systems requires higher amounts of HBM and server DRAM, creating a significant tailwind for Micron Technology. As AI models become larger and more complex, memory content per server continues to rise, benefiting memory suppliers.
Advanced Micro Devices is also strengthening its position in the AI market with its Instinct accelerators and EPYC server processors. The company’s data center business has been growing at a strong double-digit rate, supported by increasing enterprise and cloud adoption. In the first quarter of 2026, its data center revenues surged 57% year over year to a record $5.78 billion. AMD-powered AI servers require substantial DRAM capacity to support training and inference workloads, helping sustain industry-wide memory demand.
For Micron Technology, the continued expansion of NVIDIA’s and Advanced Micro Devices’ AI ecosystems is important because it creates long-term demand for high-performance DRAM products. As AI server deployments increase globally, both companies are likely to remain key indirect growth drivers for MU’s memory business.
Micron’s Price Performance, Valuation and Estimates
Shares of Micron Technology have surged around 262.9% year to date compared with the Zacks Computer and Technology sector’s return of 21.4%.
Micron Technology YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, MU trades at a forward price-to-earnings ratio of 11.21, significantly lower than the sector’s average of 26.34.
Micron Technology 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 619.8% and 72.8%, respectively. Bottom-line estimates for fiscal 2026 and 2027 have been revised upward in the past seven days.
View the Zacks #1 Rank List
Image: Bigstock
Will AI Servers Keep Micron's DRAM Demand Momentum Strong?
Key Takeaways
Micron Technology, Inc. (MU - Free Report) appears well-positioned to benefit from the rapid expansion of artificial intelligence (AI) infrastructure, which is creating a powerful demand driver for DRAM (Dynamic Random-Access Memory). AI servers require significantly more memory than traditional servers, making DRAM one of the most critical components in modern data centers.
Micron Technology’s recent results highlight the strength of this demand. In the second quarter of fiscal 2026, the company reported revenues of $23.86 billion, up nearly 196% year over year and 75% sequentially. Growth was fueled by strong demand for DRAM products, particularly high-bandwidth memory (HBM) and server DRAM used in AI systems.
The company has also indicated that demand continues to exceed supply across much of the memory market. During the second quarter, DRAM revenues jumped 207% year over year and 74% sequentially to $18.8 billion and accounted for 79% of total revenues. The robust sequential increase was mainly driven by mid-single-digit growth in bit shipments and a mid-60s percentage rise in average selling prices.
AI models are becoming larger and more complex. Training and inference workloads require massive amounts of memory capacity and bandwidth. As a result, memory content per AI server continues to rise. Micron Technology’s forecasts point to high-teens percentage DRAM bit demand growth in 2026, supported by hyperscaler investments in AI infrastructure and cloud computing.
Supply conditions further strengthen Micron Technology’s outlook. New DRAM capacity additions are limited, and meaningful output from expansion projects is not expected until fiscal 2028. This creates a favorable supply-demand balance that supports both volume growth and pricing. The memory chip maker is also benefiting from advanced DRAM technologies, including HBM4 and next-generation process nodes, which improve performance and profitability. These products are increasingly important in AI systems.
Current AI spending trends suggest that DRAM demand could remain strong through 2027. The Zacks Consensus Estimate for fiscal 2026 DRAM revenues is pegged at $85.97 billion, indicating a whopping 201% year-over-year surge.
AI Infrastructure Leaders Support MU’s DRAM Demand Growth
Two key companies tied to Micron Technology’s AI-driven DRAM opportunity are NVIDIA Corporation (NVDA - Free Report) and Advanced Micro Devices, Inc. (AMD - Free Report) . While neither produces DRAM, both are major drivers of memory demand through their AI accelerator businesses.
NVIDIA remains the dominant force in AI servers. In the most recently reported results for the first quarter of fiscal 2027, the company’s data center revenues jumped 92% year over year and 21% sequentially to $75.25 billion, reflecting extraordinary demand for its AI graphics processing units (GPUs). Each new generation of NVIDIA AI systems requires higher amounts of HBM and server DRAM, creating a significant tailwind for Micron Technology. As AI models become larger and more complex, memory content per server continues to rise, benefiting memory suppliers.
Advanced Micro Devices is also strengthening its position in the AI market with its Instinct accelerators and EPYC server processors. The company’s data center business has been growing at a strong double-digit rate, supported by increasing enterprise and cloud adoption. In the first quarter of 2026, its data center revenues surged 57% year over year to a record $5.78 billion. AMD-powered AI servers require substantial DRAM capacity to support training and inference workloads, helping sustain industry-wide memory demand.
For Micron Technology, the continued expansion of NVIDIA’s and Advanced Micro Devices’ AI ecosystems is important because it creates long-term demand for high-performance DRAM products. As AI server deployments increase globally, both companies are likely to remain key indirect growth drivers for MU’s memory business.
Micron’s Price Performance, Valuation and Estimates
Shares of Micron Technology have surged around 262.9% year to date compared with the Zacks Computer and Technology sector’s return of 21.4%.
Micron Technology YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, MU trades at a forward price-to-earnings ratio of 11.21, significantly lower than the sector’s average of 26.34.
Micron Technology 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 619.8% and 72.8%, respectively. Bottom-line estimates for fiscal 2026 and 2027 have been revised upward in the past seven 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.