Micron Technology Soars Amid AI Demand-Driven Memory Chip Shortage

Micron Technology shares surged 14% following a bullish profit forecast, driven by a global memory chip shortage and increasing demand from AI data centers. Analysts anticipate sustained supply constraints, boosting Micron's market value significantly. The cyclical memory industry expects a protracted upturn, with supply tightness extending beyond 2026.

Micron Technology's shares skyrocketed nearly 14% in premarket trading on Thursday, thanks to an optimistic profit forecast fueled by a global shortage of memory chips amid growing demand from AI data centers. The supply crunch across various industries, from smartphones to expansive data centers, has elevated prices, enabling Micron to predict a second-quarter adjusted profit nearly double Wall Street's expectations.

Morningstar analysts have noted that "tight memory supply caused by immense artificial intelligence infrastructure demand is boosting incredible market pricing for Micron and its memory chip peers." This cyclical upswing is said to enhance shareholder value substantially. Micron stands among three major suppliers of high bandwidth memory (HBM) chips, alongside Samsung and SK Hynix, which play a critical role in AI model training and deployment.

Micron is poised to gain over $30 billion in market capitalization if premarket gains persist. During an investor conference call, CEO Sanjay Mehrotra projected tightness in the memory markets extending beyond 2026. Despite analysts' differing views on the duration of this 'supercycle,' Wall Street seems to agree that supply shortages could extend further. The company prioritizes AI data center demand and has increased 2026 capital expenditure plans to $20 billion, though some analysts anticipate ongoing supply tightness until 2027.

(With inputs from agencies.)