Why This AI Stock Could Be the Biggest Surprise of 2026

Core Viewpoint - Micron Technology is positioned to benefit significantly from the growing demand for high-bandwidth memory (HBM) driven by artificial intelligence applications, with expectations of substantial revenue growth and market expansion through 2028 [1][5]. Company Performance - In the first quarter of fiscal 2026, Micron reported a revenue increase of 57% year-over-year, reaching $13.6 billion, with a gross margin of nearly 57% expected to expand to 68% in Q2 [4]. - The company has repurchased $1 billion worth of shares and paid out $1.7 billion in dividends over the past couple of years, indicating a commitment to returning value to shareholders [4]. Market Dynamics - The HBM market is projected to grow at a compound annual growth rate (CAGR) of 40% through 2028, with Micron anticipating the total addressable market to reach $100 billion, potentially two years earlier than previously expected [5]. - Micron's current supply is completely sold out through 2026, allowing the company to leverage limited supply to raise prices in response to unprecedented demand [2][5]. Stock Valuation - As of January 22, Micron's stock has increased by 38% year-to-date, yet it remains fairly valued with a forward price-to-earnings (P/E) ratio around 12, significantly lower than the tech industry average in the mid-20s [7]. - The company's market capitalization has surpassed $400 billion, reflecting its strong market position and growth potential [7]. Future Outlook - Micron is actively working to secure multiyear contracts to ensure sustained growth, positioning itself as a key player in the memory market amidst the rising prominence of AI technologies [8].