HBM Drives Micron's Growth: Can MU Sustain the Momentum?

Core Insights - Micron Technology, Inc. is witnessing a significant increase in demand for its High Bandwidth Memory (HBM) due to the rapid adoption of artificial intelligence (AI) [1] - The company has sold out its entire HBM supply for the calendar year 2025, indicating strong market demand [9] Demand and Revenue Growth - HBM demand is projected to rise from approximately $18 billion in 2024 to $35 billion in 2025, with continued growth expected in 2026 [2] - In the third quarter, Micron's HBM revenues experienced a 50% sequential growth, and the company anticipates its HBM market share to align with its DRAM share by the second half of 2025 [3][9] - The Zacks Consensus Estimate forecasts year-over-year revenue growth of 47% for fiscal 2025 and 33.9% for fiscal 2026 [5] Capacity Expansion and Investment - Micron is heavily investing in new capacity to meet the rising HBM demand, including expanding its backend manufacturing capacity and plans to increase HBM capacity in Singapore by 2027 [4][9] - Volume shipments of its 12-high HBM3E are currently underway, and sampling for HBM4 has begun for platforms expected in 2026 [3] Competitive Landscape - While there are no direct U.S. competitors in the memory chip space, companies like Intel and Broadcom play significant roles in the HBM supply chain and AI hardware ecosystem [6] - Intel is developing AI accelerators that will require a robust HBM supply, while Broadcom designs custom chips that often integrate HBM, potentially influencing Micron's supply allocation [7] Stock Performance and Valuation - Micron's shares have increased by approximately 39.8% year-to-date, outperforming the Zacks Computer – Integrated Systems industry's gain of 25.9% [8] - The company trades at a forward price-to-sales ratio of 2.68, which is lower than the industry average of 3.65 [10] Earnings Estimates - The Zacks Consensus Estimate for Micron's fiscal 2025 and 2026 earnings suggests a year-over-year increase of about 518.5% and 62.4%, respectively, with upward revisions in estimates over the past 30 days [11]