Will Data Center AI Chip Demand Keep Aiding Micron's Sales Growth?

Core Insights - Micron Technology, Inc. achieved record revenues of $37.38 billion in fiscal 2025, primarily driven by strong demand in its data center business, particularly for AI infrastructure [1][10] - The company's data center products generated $20.75 billion in revenues, accounting for 56% of total sales [1] Data Center Business Performance - Micron's data center end-market consists of two units: Cloud Memory Business Unit (CMBU) and Core Data Business Unit (CDBU) [2] - CMBU revenues surged 257% year over year to $13.52 billion, while CDBU sales increased 45% to $7.23 billion, driven by high demand for high-bandwidth memory (HBM), high-capacity DRAM, and solid-state drives [2] Product Development and Technology - Micron's latest HBM3E and LPDDR5 server memory are gaining traction, with major customer NVIDIA utilizing these products for its H200 Tensor Core GPUs [3] - The company is ramping up production of its 1-gamma DRAM and G9 NAND technologies, enhancing speed and efficiency while improving cost structure [3] Future Growth Expectations - Micron anticipates that AI servers and traditional data centers will continue to be significant growth drivers in fiscal 2026, supported by tight DRAM supply and increasing AI adoption [4] - The Zacks Consensus Estimate for fiscal 2026 revenues is projected at $53.27 billion, indicating a year-over-year growth of 42.5% [4] Competitive Landscape - While there are no direct U.S. stock exchange-listed competitors, Intel Corporation and Broadcom Inc. play crucial roles in the HBM supply chain and AI hardware ecosystem [5] - Intel is expanding its AI memory chip portfolio, integrating HBM into its high-performance accelerators, while Broadcom is developing high-performance custom AI accelerators for major companies [6][7] Stock Performance and Valuation - Micron's shares have surged approximately 201% year to date, outperforming the Zacks Computer – Integrated Systems industry's gain of 83.9% [8] - The company trades at a forward price-to-earnings ratio of 15.19, significantly lower than the industry's average of 25.34 [12] Earnings Estimates - The Zacks Consensus Estimate for Micron's fiscal 2026 and 2027 earnings implies a year-over-year increase of 95.7% and 14.5%, respectively, with upward revisions in the past 60 days [15]