2 AI Stocks Riding a Server Boom That's Accelerating Faster Than Anyone Expected

Group 1: Market Demand and Growth - Soaring demand for servers is surprising even the most optimistic AI hardware providers, with Micron boosting its outlook for 2025 server unit growth from 10% to a high teens percentage [1] - IDC predicts an 80% rise in global server spending in 2025, followed by another 24.3% increase in 2026, driven by the shift to AI servers featuring expensive GPUs [2] - Micron anticipates strong demand growth continuing into 2026, despite current production constraints [1][8] Group 2: Supply Chain and Production Challenges - A memory chip shortage is causing prices to rise dramatically, with increased demand for servers expected to push prices even higher [4] - Micron and other memory chip manufacturers are shifting production to high-bandwidth memory chips for AI accelerators, reducing the supply of standard DRAM chips necessary for servers [5] - Micron's production capacity is constrained, with the company only able to meet about 50% to two-thirds of demand from key customers [5] Group 3: Financial Performance - Micron's revenue surged 57% year over year in the first quarter of fiscal 2026, with net income nearly tripling [8] - Strong pricing driven by increasing demand for AI accelerators and servers is expected to drive another year of strong revenue and earnings growth in 2026 [8] Group 4: Future Outlook - Micron is increasing its 2026 capital spending, but new memory chip facilities will take years to build, with the first factory in Idaho expected to begin production around mid-2027 [6] - Meaningful supply growth is unlikely to occur in 2026, with Micron expected to sell every memory chip it can produce, leading to continued price increases until supply catches up or demand moderates [7]