Memory giant Micron Technology (Micron) has become the most eye-catching company in the semiconductor industry this year. It has suffered from the historic memory chip recession, and is now riding on a strong growth cycle driven by AI demand, data center expansion and HBM shortages to reignite profitability.

Micron’s financial performance has changed dramatically recently. Revenue surged to $9.8 billion in the fourth quarter of fiscal 2025, representing an annual growth rate of 79%, representing the fastest growth rate in more than a decade. Net income rebounded strongly to $2.1 billion, reversing a $1.4 billion loss in the same period in fiscal 2024. Adjusted EPS came in at $1.86, beating consensus forecasts of $1.62.

In addition, Micron's gross profit margin expanded significantly to 42% from 20% a year ago, reflecting improved pricing for dynamic random access memory (DRAM) and storage flash memory (NAND) products, as well as a more optimized product mix brought about by AI-related sales. Memory prices, which fell sharply in 2023 due to oversupply, have stabilized and soared by more than 30% in just two quarters in some markets, allowing Micron to reassert its competitive advantage against rivals such as SK Hynix and Samsung.

The global AI boom has reshaped the entire memory market, and Micron is at its core. The company's advanced HBM3E module has become a key component of NVIDIA Blackwell GPUs for training and deploying advanced AI models. Micron expects AI-related demand to account for more than 40% of its total DRAM revenue by 2026, up from 15% in 2023. Analysts estimate that each AI server consumes five to six times the memory of a traditional server, making DRAM a critical bottleneck for the entire industry.

Micron CEO Sanjay Mehrotra emphasized in the earnings call that AI is not just a tailwind, it is a multi-year structural driver of our entire product portfolio. Furthermore, Micron's HBM capacity is fully booked through 2026, demonstrating continued strong demand from hyperscalers such as Amazon, Microsoft and Google.

In response to surging market demand, Micron is implementing a production expansion plan. The company plans to invest $7 billion in capital expenditures in fiscal 2026, with a focus allocated to HBM capacity expansion in Hiroshima, Japan, and DRAM production expansion in Boise, Idaho. In addition, the company is also advancing plans to build a new large-scale wafer fab in the United States, which is supported by the CHIPS and Science Act.

Micron stated that technological innovation is another driving force for market optimism towards the company. Micron’s HBM3E is optimized for data-intensive AI work, delivering up to 1.2 TB/s of bandwidth. Its 176-layer stacked NAND and 1β process technology DRAM nodes set new industry standards for density and energy efficiency. In addition, Micron's memory shipments in the automotive and industrial segments increased 38% year-over-year, solidifying its position in the edge AI market.

Micron stock is one of the top performers in the semiconductor industry in 2025, according to analyst research. Shares are up 65% so far in 2025, easily outpacing the Philadelphia Semiconductor Index's 42% gain. Therefore, analysts gave high praise to Micron's new operating model, saying that Micron has reached a "structural profit threshold that fundamentally changes the way investors evaluate memory." Therefore, foreign-owned Morgan Stanley raised its target price to $158, while Barclays raised it to $164, calling Micron one of the purest AI leveraged players in the semiconductor field.

Although Micron has a market capitalization of US$157 billion, its price-to-earnings ratio is only 22.8, which is still at a lower level than AI peers NVIDIA's 53.8 and Broadcom's 26.4, which benefit from the same demand drivers. Therefore, market analysts are generally optimistic. Of the 35 analysts tracked by FactSet, 29 have "buy" investment ratings.