ZACKS·2026-01-20 14:15Core Insights - Micron Technology, Inc.'s NAND business is experiencing a turnaround driven by increased demand for data center solid-state drives (SSDs) due to artificial intelligence (AI) and cloud expansion [1][4] Group 1: Financial Performance - In Q1 FY26, Micron's NAND revenues increased by 22% year-over-year and sequentially to $2.7 billion, with bit shipments rising in the mid-to-high single-digit percentage range and average selling prices increasing in the mid-teen percentage range [2][11] - Revenues from the data center NAND portfolio surpassed $1 billion in Q1 FY26, indicating strong demand for data center SSDs [2][11] - The Zacks Consensus Estimate for Micron's fiscal 2026 NAND revenues is projected at $15.24 billion, reflecting a year-over-year growth of 79.3% [5] Group 2: Market Dynamics - AI workloads are generating significant data storage needs, leading to increased demand for high-capacity and high-performance enterprise SSDs, which are more heavily utilized in data centers compared to consumer devices [3] - As cloud providers expand their AI infrastructure, the storage intensity is expected to rise, creating a more durable demand base for NAND products [3] Group 3: Strategic Positioning - Micron is focusing on higher-value NAND products, particularly data center SSDs, rather than low-margin consumer solutions, which supports better pricing and margins [4] - Hyperscalers are increasingly opting for long-term contracts to secure memory supply and capacity, which is likely to enhance demand for Micron's data center SSDs [4] Group 4: Competitive Landscape - Competitors like Sandisk and Seagate are also active in the NAND space, with Sandisk reporting a 26% sequential increase in data center revenues in Q1 FY26 driven by AI demand [6][7] - Seagate is expanding its presence in the SSD market while maintaining a strong position in high-capacity hard-disk drives for data centers [8] Group 5: Valuation Metrics - Micron's shares have surged approximately 231.7% over the past year, outperforming the Zacks Computer – Integrated Systems industry's gain of 94.3% [9] - The company trades at a forward price-to-earnings ratio of 9.83, significantly lower than the industry average of 17.98 [12] - Earnings estimates for fiscal 2026 and 2027 imply year-over-year increases of 297.5% and 30.9%, respectively, with recent upward revisions in bottom-line estimates [15]