The first trading day of 2026 delivered a clear message: the AI trade isn't slowing down. Micron Technology surged 8% on Thursday, leading the semiconductor sector higher as investors bet on a deepening supply crunch in the memory chip market.

Shares rose to $308.33 by mid-morning, extending an extraordinary run that saw the stock gain more than 240% in 2025. But analysts say there's more upside ahead.

Why Micron Is Leading the Charge

Morgan Stanley named Micron its top semiconductor pick for 2026, with analyst Joseph Moore pointing to what he calls "the most severe DRAM and NAND shortage in the last three decades."

The shortage isn't accidental—it's being driven by the explosive buildout of AI infrastructure. Every data center racing to deploy large language models needs high-bandwidth memory (HBM), and there simply isn't enough to go around.

"Micron confirmed that its entire HBM output for 2026 is already fully allocated under contract. That's an unusually strong signal of demand certainty."

— Morgan Stanley Research Note

The Numbers Behind the Surge

Here's what's driving the bull case:

  • 240% gain in 2025 — Micron was one of the best-performing chip stocks last year
  • 100% of 2026 HBM production sold — Contracts already locked in for the entire year
  • 11% HBM market share — Room to grow against SK Hynix (53%) and Samsung (35%)
  • Margins above 50% — AI memory commands premium pricing

Asia Sets the Tone

The rally was fueled by overnight developments from Asia. Samsung Electronics' chip chief reported customers praising its next-generation HBM4 chips, while SK Hynix's CEO warned that competition was intensifying as AI demand becomes table stakes for chipmakers.

Meanwhile, Baidu's U.S.-listed shares jumped 10.5% after announcing plans to spin off its semiconductor unit, Kunlunxin, for a Hong Kong listing—another sign that chip assets are commanding premium valuations.

What This Means for Investors

The semiconductor trade in 2026 is evolving. While Nvidia remains the poster child for AI, the focus is shifting to the picks-and-shovels plays that power the infrastructure.

Memory chips are emerging as a bottleneck, and companies that can deliver high-bandwidth solutions are seeing their pricing power expand. For Micron, that means a rare combination: surging demand, constrained supply, and multi-year visibility on contracts.

The question isn't whether AI memory demand will continue—it's whether Micron can scale production fast enough to capture more market share from its Korean rivals.

Key Levels to Watch

  • Support: $285 (50-day moving average)
  • Resistance: $320 (psychological level)
  • 2026 Target: Morgan Stanley sees $350+ potential

The Bottom Line

Micron's 8% pop on the first trading day of 2026 isn't just a one-day event—it's a signal that the AI memory trade has legs. With supply constraints persisting and demand locked in, the stock could be one of the year's standout performers.

For investors looking to play the AI boom beyond the obvious names, Micron offers exposure to the infrastructure layer that makes it all possible.