With Micron (MU) benefiting tremendously from the AI Revolution and the shares still trading at a very low valuation despite their massive rally, all investors should consider buying MU stock at this point.
Additionally, MU looks well-positioned to benefit over the longer term from the growth of the space economy and the likely placement of data centers in space.
A Huge Beneficiary of the AI Boom
Historically, Micron’s core memory chip business endured relatively short ‘boom-and-bust’ cycles. But the advent of AI and the resulting huge demand for memory chips appears to have radically changed that paradigm, as there are currently significant shortages of memory chips. Indeed, Micron itself predicts that, in the medium term, it will only be able to provide 50%-67% of the number of memory chips that some of its customers are seeking.
And MU CEO Sanjay Mehrotra, speaking on the company’s fiscal first quarter conference call held on December 17, reported that he expects these “tight market conditions,” driven by “sustained and strong industry demand, along with supply constraints..to persist beyond..2026.”
Further, Mehrotra predicted that the total addressable market for High-Bandwidth Memory (HBM), a type of memory chip used extensively in AI, would jump to about $100 billion in 2028 from roughly $35 billion in 2025. Micron is a top developer of HBMs, and these chips have been a key reason for the company’s powerful growth in recent quarters.
Showing how tremendously the powerful demand for these chips is boosting MU’s performance, the revenue of the firm’s Cloud Memory unit, which includes its HBM business, soared to $5.28 billion in Q1, roughly double the $2.65 billion of sales that it generated in Q1 of the previous year. Further, the unit’s gross margin increased to 55% from 40%.
Overall, the chip maker’s revenue jumped 57% year-over-year to $13.6 billion, while its operating income soared to $6.42 billion from $2.39 billion. Even more impressively, Micron’s earnings per share advanced to $4.78 from $1.79.
Micron’s Valuation Is Still Low Despite the Big Rally of MU Stock
Although the company’s shares rallied more than 240% in 2025, they were still changing hands at a very low forward price-earnings ratio of 9.9 times as of the market close on January 2, according to Yahoo Finance. In light of the firm’s tremendous growth, that is an almost absurdly low valuation.
And analysts on the whole expect the chip maker to continue expanding very quickly, as their average estimate calls for its earnings per share to jump to $32.21 this year from $8.29 last year.
looks Well-Positioned for the Boom of the Space Economy
Micron reports that it has developed “a space-qualified” memory chip. According to the company, this product, which was unveiled last July, is “the largest-density, radiation-tolerant” chip in its class.
What’s more, one of Micron’s partners, Mercury Systems, incorporates MU’s chips “in its solid-state data recorders” which are now being used by NASA on the International Space Station.
Consequently, MU looks poised to benefit significantly over the long term from the likely rapid growth of the space economy. With Jeff Bezos and Elon Musk talking about building data centers in space, Micron’s chips could start being very widely used outside of Earth fairly soon.
