Amid the broader tech selloff, Micron (MU) stock is climbing, driven by an outstanding start to fiscal 2026. Micron’s core products, DRAM, NAND flash, and high-bandwidth memory (HBM) used in AI data centers, are in very high demand. This has boosted the company’s revenue, margins, and earnings in the first quarter of fiscal 2026. While the tech-heavy Nasdaq Composite Index ($NASX) is down 2.4%, MU stock is up 32.3% so far this year and has beaten the overall market. And many analysts believe it can surpass its 52-week high and reach $500 this year.
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With a market cap almost touching $500 billion, Micron has become a strong contender in the semiconductor space. Analysts at Deutsche Bank, Phillip Securities, and Rosenblatt Securities all anticipate MU stock will keep climbing and touch $500 by the end of 2026 as demand for its products remains high.
Micron Technology designs and manufactures memory and storage chips that power data centers, AI systems, PCs, smartphones, cars, and other electronic devices. In the most recent first quarter of fiscal 2026, Micron reported revenue of $13.6 billion, an increase of 57% year-over-year (YoY), marking its third consecutive quarterly revenue record. Adjusted earnings surged 167% YoY to $4.78 per share.
DRAM revenue alone contributed 79% of total revenue and grew 69% YoY to $10.8 billion. NAND revenue also increased 22% YoY to $2.7 billion. In fact, Micron’s data center NAND portfolio generated over $1 billion in revenue during the quarter. The G9 node is ramping up with strong yields, and management predicts it will become the company’s largest NAND node later in fiscal 2026.
HBM remains Micron’s primary growth engine. The company has finalized pricing and supply commitments for all of its 2026 HBM production, including its top-tier HBM4 product, which offers speeds exceeding 11 gigabits per second. Production of HBM4 is scheduled to ramp up in the second half of 2026, with strong yield performance anticipated. The HBM total addressable market (TAM) is expected to increase at a 40% CAGR until 2028, reaching over $100 billion. Micron is in a leading position to capitalize on this growth.
The company generated $3.9 billion in free cash flow, allowing it to pay down its debt by $2.7 million and end the quarter with $12 billion in cash and investments. Management believes that memory is critical to AI cognitive capabilities, as AI data center build-outs drive large increases in demand for high-performance memory and storage. Despite heavy competition from rivals such as Samsung (SMSN.L.EB), Micron is ramping up advanced nodes, increasing global manufacturing, and signing multiyear deals and has a better competitive position.
For calendar year 2026, Micron expects both DRAM and NAND industry bit shipments to increase around 20%, constrained by supply. Management indicated that over the medium term, the company may only be able to fulfill roughly half to about two-thirds of the demand coming from certain major customers. And to address this tight supply, Micron plans to increase fiscal 2026 capital expenditure to roughly $20 billion, up from a prior estimate of $18 billion. The focus is now on accelerating equipment installations and construction timelines. The first wafer output at its Idaho fab could be ready by mid-calendar 2027, earlier than previously anticipated, with construction on a second Idaho fab to begin in 2026, with operations targeted for 2028. Additionally, a New York fab could break ground in early 2026, with supply coming online in 2030 and beyond.
For the second quarter, Micron expects revenue of $18.7 billion (plus or minus $400 million), which will represent an increase of 132.3% YoY. Gross margin could be around 68%, and adjusted earnings could be around $8.42 (plus or minus $0.20) per share, representing a staggering increase of 439.7%. Management expects gross margins to expand further through the other quarters of fiscal 2026, though at a more gradual pace. The company even anticipates significantly higher free cash flow YoY in fiscal 2026, even though capital spending could be more towards the second half of the year.
Analysts who cover Micron forecast exceptional growth over the next two fiscal years. In fiscal 2026, revenue is expected to increase by 103.8% to $76.1 billion, followed by a 28.1% YoY increase in fiscal 2027. Similarly, earnings could climb by a staggering 309.1% in fiscal 2026, followed by another 31.3% in fiscal 2027.
Micron stock is currently trading at 12 times forward earnings, which is low even though analysts expect massive growth. This could be because the memory industry is cyclical. Second, much of the AI enthusiasm and premium valuation has gone to chip makers, while memory suppliers have been overlooked. But eventually, Micron’s valuation might catch up, making it a cheap AI stock to grab now.
With AI driving demand across data centers, PCs, smartphones, automotive, and industrial markets, memory is becoming increasingly important to computing performance. And Micron appears poised to deliver sustained revenue growth, expanding margins, and strong free cash flow through fiscal 2026 and beyond. If this rate of growth continues, there is a possibility MU stock can even cross its high price target of $500.
Overall, Wall Street also remains strongly bullish about MU stock. Out of the 42 analysts covering MU, 33 rate it a “Strong Buy,” six rate it a “Moderate Buy,” and three recommend a “Hold.” The stock has surpassed its average target price of $350.45.
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On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
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