When it comes to electronic devices, the technology sector is facing some major hurdles:
- Smartphone production from Apple, Qualcomm, Xiaomi, and ARM Holdings are all being reduced.
- Tablets and PCs will all be climbing in price, according Dell, Lenovo, and ASUS.
- Charter Communications announced that its routers and HD boxes will all be getting price hikes.
And, perhaps the most significant announcement of the bunch: Nvidia announced that it would not have a new gaming GPU released in 2026 – the first time ever in 30 years.
All of these cutbacks and price hikes have one thing in common: what Goldman Sachs analysts identified back in December 2025 as “the great memory crunch”, i.e., the drastic shortage of high-bandwidth memory (HBM) chips. The blame for the dearth of HBM supply lies squarely on the shoulders of the AI industry, whose data centers have an unquenchable thirst for more and more HBM. However, while device manufacturers may be facing production challenges, HBM manufacturers are in the catbird’s seat, and their past 12-month gains reflect it. While there are several major HBM semiconductor companies, one of the oldest ones and most crucial for Nvidia’s GPUs is Micron Technology (NYSE: MU | MU Price Prediction).
When Supply Falls and Demand Rises
AI has rapidly become the largest consumer of High Bandwidth Memory chips and is expected to buy 70% of global production in 2026.
Bloomberg reported recently that the HBM market was $4 billion in 2023 and is expected to balloon to $130 billion in 2030. The proliferation of AI is the major culprit. This is due to several factors:
- Since the amount of data needed to make AI function is so massive, AI chip systems cannot operate without HBM chips to store that data and allow the AI to search for and recover the data rapidly due to high bandwidth.
- Data centers are demanding HBM in several configurations, including SSD, flash drives, and other forms.
- AI data centers use HBM in their central processing units and in their AI processors.
According to Trend Force, AI data centers are anticipated to consume 70% of global HBM production in 2026, and that statistic may increase until additional production can find a way to make a dent in the supply and demand imbalance.
Why This Bodes Well For Micron
Based on current market supply and demand, Micron’s 2026 and 2027 earnings may skyrocket past its 2025 performance.
By any metric, Micron has had a breakthrough year over the past 12 months. Its stock is up +312% at the time of this writing. Other performance highlights include:
- Fiscal 2025 revenues exploded to $37.38 billion, up from $25.11 billion in 2024.
- Earnings for 2025 of $8.29 per share blew past 2024’s $1.30.
- 15% of the $37.38 billion revenues, or $5.6 billion, came from HBM chips sales.
Bloomberg analysts forecast that Micron could capture 25% of the AI market for HBM. Therefore, Micron’s HBM revenue from the AI sector alone could increase to $32.5 billion in five years. Additionally, Wall Street analysts are forecasting Micron’s 2026 earnings to soar to $33 per share and for 2027 to take a further leap to $42 per share. Also, since Micron is still relatively underpriced at 13x forward earnings compared to the 25x average of Nasdaq-100 tech stocks, a fair price would calculate to roughly $1,090, almost a 3-fold increase over its current $390s range.
Since memory is not a proprietary design per se, it is essentially a commodity. Therefore, HBM producers ordinarily have limited flexibility for pricing in a normal demand market. However, the huge demand escalation from AI, smartphones, PCs, tablets, and even cars, is unlikely to end anytime soon. Thus, the memory makers can control their price destiny, and have already done so, with some retail priced HBM kits increasing nearly 7-fold between October 2025 and February 2026. Micron is certainly in that ball park too. Maybe Jensen Huang can make a deal with Micron so that the new Nvidia GPU can still come to market before Christmas.
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