Micron Joins $1 Trillion Club as AI Memory Demand Shows No Sign of Slowing

Micron has reached a trillion-dollar valuation, and many on Wall Street think it could go higher. The stock jumped 19% on Tuesday after UBS raised its price target to $1,625, then rose another 2.8% on Wednesday to close at $920.99. This puts Micron among a select group of companies, with Nvidia leading at a $5.1 trillion market cap. Analysts say these gains are backed by strong and ongoing demand.

The main reason for optimism is high-bandwidth memory. AI servers need HBM to handle huge amounts of data, and each HBM unit uses about three times more wafer capacity than regular memory. As HBM production grows, it limits the supply of other memory types and drives up prices across the industry. New AI servers also need NAND flash memory to store large data sets, which adds even more demand. Melius Research estimates that up to 50% of Micron’s new supply could be tied up in long-term deals by next year. One analyst called memory the biggest bottleneck in AI history.

SK Hynix is also benefiting from this trend. The South Korean memory company rose 9.3% in local trading on Wednesday, bringing its market value to about $1.061 trillion. Both Micron and SK Hynix have been making long-term supply deals with major customers, which analysts believe will help keep their profit margins strong.

Even after rising more than eight times in the past year, Micron trades at only 9.9 times its expected earnings for the next twelve months. That is much lower than Nvidia’s 22 times and AMD’s 52 times. SK Hynix is even cheaper at 6.9 times forward earnings. According to Sevens Report analysts, earnings are growing faster than share prices, so valuations remain reasonable as the stocks go up.

SK Hynix has applied to the Securities and Exchange Commission to list American depositary receipts, with reports suggesting this could happen in June or July. Korean media say the company could raise up to $10 billion from the listing, which would give U.S. investors direct access to the world’s second-largest memory chip maker for the first time.

Sevens Report characterized the gains as extreme in the near term, but grounded in Sevens Report described the recent gains as extreme in the short term, but said they are supported by strong demand. The firm does not expect this demand to drop off unless large tech companies stop building AI data centers, which they think is unlikely over the next 12 to 18 months.