Amid the AI infrastructure frenzy, storage demand soared, and Micron (MU.US)'s performance crushed expectations! Hints at the extension of the “supercycle” to 2027

The Zhitong Finance App learned that the largest computer memory chip manufacturer in the US, Micron Technology (MU.US), gave extremely optimistic performance outlook data for the current quarter, far exceeding Wall Street analysts' recent unanimous expectations, and unexpectedly raised capital expenditure for the 2026 fiscal year. In addition, Micron CEO hinted that this round of “memory chip supercycle” is expected to continue until 2027, further indicating that the surge in demand for memory chips and the long-term shortage on the supply side under the unprecedented boom in the global layout of AI has enabled the company to use its DRAM/NAND series of storage chips The product charges a higher price.

Micron's latest release of performance data and prospects that far surpass the general expectations of Wall Street analysts, as well as the strong performance and future prospects previously announced by the world's two largest memory chip manufacturers, SK Hynix and Samsung from South Korea, highlighted the sharp rise in the volume and price of storage products, including HBM storage systems, which can be described as a comprehensive verification of the “storage supercycle” logic. In the first quarter of the 2026 fiscal year ending November 27, the memory chip giant's performance also far exceeded analysts' expectations of continuous improvement, and jointly drove Micron's stock price to soar more than 8% after the market. At a time when the AI bubble rhetoric swept the world, it can be described as tenaciously supporting the “AI bull market narrative” and investors' “AI belief”.

Under the impetuous bullish narrative of the so-called “memory chip supercycle,” Micron Technology's stock price trend has entered a sharp trend since the second half of this year, driving the stock to soar by more than 170% this year. Micron even announced in early December that it would stop selling storage products to individual consumers in the PC/DIY market in order to focus on providing storage production capacity for large-scale AI data centers being built on a large scale, and even announced in early December that it would stop selling storage products to individual consumers in the PC/DIY market, highlighting that as the global AI infrastructure boom is in full swing, demand for high-performance data center-level DRAM and NAND series products continues to surge.

Wall Street giant Wells Fargo said in the latest research report that as overall sales in the DRAM industry, including HBM storage systems, are expected to grow by more than 100% year on year in 2026, the US-based storage giant, Micron Technology, which is also the third-largest memory chip manufacturer in the world with a relatively high contribution to the DRAM business, will be one of the biggest beneficiaries. Wells Fargo reiterated its target price of up to $300 for Micron, as well as the “Overweight” rating.

“Market research agency TrendForce has raised its forecast for total DRAM industry revenue for the CY25 and Cy26 calendar years—currently estimated at around US$165.7 billion (representing +73% YoY) and US$333.5 billion (+101% YoY), respectively.” Aaron Rakers (Aaron Rakers), a senior analyst at Wells Fargo Bank, wrote in a report to clients.

Lax added that TrendForce is positive about Micron's process upgrades over the next year. These higher-end 1gamma (1-gamma) process nodes, which focus on the DRAM chip product line, are expected to climb the slope and expand to 38% of total bit value output by the end of 2026, compared to only 12% in 2025. As a comparison, analyst Lax added that the Wells Fargo research team's predictions for Samsung Electronics and SK Hynix, the two largest memory chip makers in the world, showed that by the end of 2026, their high-end 1gamma-equivalent DRAM processes would account for 11% and 25%, respectively, in the next year.

eMarketer said in a statement: “Micron has strategically adjusted its storage capacity in the field of artificial intelligence. As demand for storage from artificial intelligence infrastructure continues to soar, so does demand for critical components, and Micron will be one of the biggest winners able to supply these storage components.”

Demand for memory chips is expanding blowout under the AI boom! Micron's performance and outlook crush Wall Street expectations

Micron management said in a performance statement on Wednesday local time that the company's expected revenue range for the second quarter of fiscal year 2026 will be between US$18.3 billion and US$19.1 billion. In contrast, Wall Street analysts' average forecast for this period was $14.4 billion — you need to know that this performance forecast has been continuously raised since tech giants such as Google, Amazon, and Nvidia announced strong results at the end of October. Even so, the official outlook given by Micron is still stronger than analysts' expectations after continuous improvement, which is enough to see how demand for memory chips has exploded under the wild wave of global AI infrastructure. Excluding some projects, Micron's adjusted profit range per share for the second fiscal quarter was $8.22 to $8.62, while Wall Street's average forecast was about $4.71.

In terms of other performance forecasts, the overall gross margin forecast given by Micron under GAAP standards is 67.0%, fluctuating 1 percentage point up and down; under the non-GAAP scale, Micron's gross margin forecast is 68.0%, fluctuating 1 percentage point up and down, far higher than Wall Street analysts' general expectations of 55.7%. Under GAAP, operating expenses are estimated to be approximately US$1.56 billion, fluctuating up and down US$20 million; under non-GAAP, operating expenses are estimated to be US$1.38 billion, fluctuating up and down US$20 million. More importantly, the company raised its capital expenditure forecast for the 2026 fiscal year from US$18 billion to US$20 billion, highlighting that the continued explosive expansion of demand for memory chips is beginning to drive the company to accelerate the pace of capacity expansion.

After the results were announced, Micron's stock price once surged more than 8% in after-market trading of US stocks. The stock has risen 170% this year. The stock price closed at $225.52 during the normal trading period on Wednesday. Wall Street's recent target price for Micron can be described as continuing to rise within 12 months. The average target price is already close to the 300 US dollar mark.

As shown in the above chart, Micron's stock price even outperformed Nvidia and other popular chip stocks in 2025, and the exponential expansion in demand for memory chips drove the company's stock price to soar.

Micron CEO Sanjay Mehrotra (Sanjay Mehrotra) said in a statement that Micron is positioned as “an indispensable global AI enabler.” “We are accelerating our investments to support our customers' strong and growing demand for DRAM and NAND storage products.”

Large AI data centers are in full swing around the world, and strong demand for storage components indispensable to AI training/inference systems is surpassing supply, benefiting memory chip companies such as Micron. However, there is also a sharp shortage of storage products with low requirements for consumer electronics such as personal computers and smartphones, which together drive the prices of DRAM and NAND series storage products to a sharp rise. This is due in large part to the storage industry shifting production capacity to more advanced manufacturing technology for AI data centers.

The three monopoly memory chip manufacturers SK Hynix, Samsung, and Micron have concentrated most of their production capacity on HBM storage systems — the advanced process production capacity and manufacturing and testing complexity required for such storage products are much more complex than DDR series and HDD/SSD series memory chips, so the three major memory chip leaders continue to migrate production capacity to HBM, which has largely caused these hard disk storage products to be in short supply.

PC makers such as Dell Technologies Inc. (Dell Technologies Inc.) and HP Inc. (HP Inc.) have warned investors that they expect a continued shortage of memory chips over the next year — thereby driving up the price of computing components. This also gives Micron a greater advantage when playing with customers in a segment of the chip industry that often fluctuates a lot.

“The rise in storage prices is unlikely to ease to any extent in the short term,” Jake Silverman (Jake Silverman), senior analyst at Bloomberg Intelligence, said in a report.

Micron, headquartered in Boise, Idaho, USA, has been one of the most important beneficiaries of AI computing power requirements since ChatGPT became popular around the world in 2023, mainly because its high-bandwidth memory (i.e. HBM storage system) and enterprise-grade high-end DDR5 and data center level SSD products are essential for developing artificial intelligence models and the operation of AI chips and server clusters required for AI inference. At the same time, as the only major manufacturer of memory chips in the US, the company's basic outlook has undoubtedly greatly benefited from the “return of manufacturing to America” policy led by the Trump administration.

In the first quarter of the fiscal year ending November 27, Micron's overall revenue increased sharply by 57% to US$13.6 billion. Excluding some items, adjusted earnings per share were approximately $4.78. In contrast, Wall Street analysts previously generally expected revenue of $13 billion and earnings per share of around $3.95.

In terms of other performance data, under GAAP, Micron's operating profit was US$6.136 billion, accounting for 45.0% of revenue, a year-on-year surge of 68%; under the NON-GAAP scale, operating profit was US$6.419 billion, accounting for 47.0% of revenue, higher than analysts' expectations of US$5.37 billion, and surged 62% at the same time. Cash flow from operating activities was approximately US$8.41 billion, higher than analysts' expectations of US$5.94 billion, higher than the previous quarter's US$5.73 billion, and significantly higher than the same period last year of approximately US$3.24 billion.

In a performance conference call with analysts, Mehrotra said that the storage shortage is likely to continue for a long time. “Continued and strong industry demand, combined with supply constraints, is contributing to a very tight market situation.” he emphasized. “We expect these conditions to continue beyond the end of the 2026 calendar year.”

The CEO also said Micron was disappointed that it was unable to fulfill all storage orders. “We can only meet about 50% to two-thirds of the demand from some key customers,” he said. “As a result, we remain extremely focused on working to increase the supply of production capacity and making the necessary investments.”

Manish Bhatia (Manish Bhatia), executive vice president of operations at Micron, said in an interview: “In terms of size and time frame, this is the worst disconnect between supply and demand in the industry in 25 years.”

These efforts to expand production capacity include increased spending. The company currently expects to invest about 20 billion US dollars in capital expenditure this fiscal year, which is unexpectedly higher than the previous forecast of 18 billion US dollars. According to financial data, the company spent about US$13.8 billion to build new clean plants and semiconductor equipment in fiscal year 2025.

Micron - “Google AI Chain” and “OpenAI Chain” are inseparable from it! Welcoming the “AI Infrastructure Super Dividend”

As ChatGPT developer OpenAI launched GPT-5.2, which is “ridiculously strong” in deep reasoning and code generation to compete with Gemini 3 launched by Google in late November, the “pinnacle AI duel” between Google and OpenAI reached the climax chapter of the duel story between the two sides.

From an investment perspective, OpenAI and Google respectively represent the two most popular investment lines in the global stock market today — “OpenAI Chain” and “Google AI Chain”. According to Wall Street, the three “super investment themes” in the stock market can be called the “strongest beneficiary theme” between Google and OpenAI, which may continue to clash for many years. The two are strong rivalries or one side enters an absolute leading edge. These three themes are all long-term benefits — these three themes are high-speed data center interconnection (DCI), optical interconnection, and enterprise-grade high-performance storage.

When we dismantle the “OpenAI Chain” and the “Google AI Chain”, we can find that the former basically corresponds to the “Nvidia AI Computing Power Chain” (with the AI GPU technology route as the core), while the latter corresponds to the “TPU AI Computing Power Industry Chain” (with the AI ASIC technology route as the core), so whether it is an “InfiniBand+ Spectrum-X/Ethernet” high-performance network infrastructure+GPU cluster led by Google (Circuit Switching, Optical Circuit Switching)” High-performance network infrastructure+TPU clusters are all inseparable from storage product leaders focusing on enterprise-grade high-performance storage systems in data centers.

Similar to Wells Fargo's point of view, Mizuho (Mizuho), another Wall Street financial giant, also believes that American storage giant Micron will be one of the biggest beneficiaries of the accelerated expansion of Google's TPU AI computing power cluster and the continued large-scale increase in demand for “Nvidia” Blackwell/Rubin AI GPUs.

Judging from the nearly $1.4 trillion AI computing power infrastructure cumulative agreement and the “Stargate” AI infrastructure process that OpenAI has signed, these super AI infrastructure projects all urgently require large-scale data center enterprise-grade high-performance storage (with storage products such as HBM systems, enterprise-grade SSD/HDD, and server-level DDR5 as the core). Growth is driving the demand and sales price of almost all storage products and the stock prices of major storage companies to skyrocket.

Well-known Wall Street institutions, including Mizuho and Wells Fargo Bank, recently released a research report stating that whether it is Google's huge TPU AI computing power cluster or a massive Nvidia AI GPU computing power cluster, it is inseparable from HBM storage systems that require full integration of AI chips, and that currently technology giants accelerate the construction or expansion of AI data centers must purchase server-level DDR5 storage and enterprise-grade high-performance SSD/HDD on a large scale; and Micron is stuck in these three core storage areas at the same time: HBM and server DRAM (including DDR5/LPDDR5X) and high-end data center SSDs are one of the most direct beneficiaries of the “AI memory+storage stack”, and can be described as receiving the “super dividend” of AI infrastructure.

In recent months, the world's two largest storage giants, Samsung Electronics and SK Hynix, and storage giants such as Western Digital and Seagate have recently announced strong results, causing Wall Street banks such as Morgan Stanley to chant the “storage supercycle”, highlighting the continuous blowout of AI training/inference computing power requirements in the world and the recovery cycle of consumer electronics demand driven by the end-side AI boom have fully driven the expansion of the DRAM/NAND series storage product demand segment, especially the DRAMH segment with the highest share in the Micron storage business BM storage With server-level high-performance DDR5; in addition, demand for enterprise-grade SSDs in the NAND sector has also recently surged.

As for SK Hynix's target stock price, Wall Street financial giant Bank of America recently even gave a target share price of 800,000 won, which means SK Hynix's potential increase of 50% over the next 12 months, which has repeatedly reached new highs; it is worth noting that the 3.6x 2026E P/B valuation by Bank of America means that this multiple is fully 50% + higher than 2x P/B, which peaked in the 2018 round of “cloud computing-driven storage super bull market”, which means this round of storage is expected to continue until the first half of 2027 The supercycle is expected to surpass the previous boom cycle in terms of both intensity and time span.

According to the latest semiconductor industry outlook data recently released by the World Semiconductor Trade Statistics Organization (WSTS), the global chip demand expansion trend is expected to continue to be strong in 2026, and MCU chips and analog chips, which have continued to weaken since the end of 2022, are also expected to enter a strong recovery curve.

WSTS expects that after a strong rebound in 2024, the global semiconductor market will grow by 22.5% in 2025, with a total value of 772.2 billion US dollars, which is higher than the forecast given by WSTS in spring; the total value of the semiconductor market in 2026 is expected to expand significantly to 9755 billion US dollars on the basis of strong growth in 2025, close to the market size target of 1 trillion US dollars in 2030 predicted by SEMI, which means it is expected to increase 26% year over year.

WSTS said that this strong growth trend for two consecutive years will be mainly due to continued strong momentum in the logic chip field dominated by AI GPUs and the storage sector dominated by HBM storage systems, DDR5 RDIMM, and enterprise data center NAND. Both fields are expected to achieve extremely strong double-digit growth, thanks to the continued strong expansion of demand in fields such as artificial intelligence inference systems and cloud computing infrastructure.

According to Wall Street giants Morgan Stanley, Citi, Loop Capital, and Wedbush, the global AI infrastructure investment wave with AI computing power hardware at the core is far from over and is only at the beginning. Driven by an unprecedented “AI inference computing power demand storm”, the scale of this round of AI infrastructure investment, which will continue until 2030, is expected to reach 3 trillion to 4 trillion US dollars.