Memory chips used to be the most boring corner of the semiconductor industry—cyclical, commoditized, and at the mercy of supply-demand swings. That was before artificial intelligence turned high-bandwidth memory into the most sought-after component in tech. Micron Technology reports earnings Wednesday, and the numbers will reveal whether the AI memory crunch is easing or intensifying.
The Numbers That Matter
Micron delivered record fiscal Q1 2025 revenue of $8.71 billion, up from $4.73 billion in the same period last year—an 84% year-over-year increase. But the real story is in the composition of that revenue.
Data center revenue grew over 40% sequentially and over 400% year-over-year. Revenue from high-bandwidth memory (HBM) alone hit nearly $2 billion in the quarter, putting HBM on an $8 billion annual run rate. It wasn't long ago that Micron's HBM revenue rounded down to zero.
For fiscal 2025, Micron's total revenue grew nearly 50% to a record $37.4 billion, with gross margins expanding by 17 percentage points to 41%.
The Shortage Nobody Saw Coming
A Reuters report in early December described an acute global shortage of memory chips affecting everything from advanced HBM in AI data centers to conventional memory used in PCs and smartphones. SK Hynix, Micron's main competitor, suggested the shortage could last through late 2027.
Why is this happening? AI training requires massive amounts of high-bandwidth memory. The new generation of AI accelerators from Nvidia, AMD, and custom chips from hyperscalers all demand HBM that simply isn't available in sufficient quantities. Memory manufacturers are scrambling to add capacity, but new fabs take years to build.
Pricing Power Returns
Micron management said they expected to lock in deals to sell out their calendar 2026 HBM supply within months, with HBM3E pricing agreements mostly wrapped up. Discussions for the next generation, HBM4, are still ongoing—and management suggested HBM4 pricing could be "significantly higher."
This is a remarkable turnaround for an industry that has historically suffered from brutal price competition. When demand exceeds supply by this much, pricing power shifts dramatically to manufacturers.
What the Street Expects
Micron shares closed at $241.14 on Friday, down 6.7% on the day after trading as high as the mid-$250s earlier in the session. The pullback may reflect profit-taking ahead of earnings rather than fundamental concerns.
Bank of America raised its price target from $180 to $250. Analyst targets now range from $107 to $338, reflecting both the potential upside of a multi-year AI memory boom and the uncertainty inherent in predicting supply-demand dynamics.
The Strategic Shift
Notably, Micron announced its Crucial consumer business will wind down by February 2026, signaling a sharper focus on enterprise and AI customers. The company is betting its future on the data center, not the DIY PC builder.
The Bottom Line
Micron's earnings Wednesday will be the most important read on the AI memory market this quarter. If the company confirms that supply remains tight into 2027, memory stocks could have years of pricing power ahead. If they hint at capacity additions catching up to demand, the story changes entirely. For AI investors, this is must-watch data.
