Micron’s stock is up 120% YTD – or 3X more YTD than AI heavyweight Nvidia. Recently, the high-bandwidth memory content that Micron supplies has increased 3.5X between GPU generations, leading to a quiet memory boom across DRAM and NAND suppliers.
Memory is typically a cyclical industry that is low margin and lumpy, yet memory is seeing a newfound resurgence from AI that is strong enough to transform commoditized hardware into a secular trend as the AI economy is built out. AI servers use more DRAM and NAND than traditional servers, relying heavily on high-bandwidth memory (HBM) for training and inference.
In fiscal 2025, Micron’s HBM, high-capacity dual in-line memory modules (DIMMs) and low-power (LP) server DRAM revenue reached $10 billion, up more than fivefold from the prior year, while HBM alone reached $2 billion in revenue in Q4. Data center is already proving to be a strong driver of growth for Micron, accounting for 56% of sales in FY25, up from 35% in FY24. On a dollar basis, data center revenue surged 137% YoY to $20.75 billion.
Below, we look at how Micron has quietly outperformed some of the biggest players in AI YTD and if its ability to defy the odds can continue.
Micron Delivers 3.5× More Memory per GPU, Powering 34× Larger AI Models
HBM capacity per chip continues to rise with each new generation of GPU, as its ability to offer higher bandwidth, performance, and lower latency is crucial for increasingly powerful large language models.
For example, we’ve seen a ~3.5x increase in HBM content in short fashion on Nvidia’s GPUs within about three years’ time frame:
- The H100 featured 80GB of HBM2e content per chip. This chip began shipping in Q4 2022 and ramped in early 2023.
- The H200 featured 141GB of HBM3e content per chip, 1.76x higher than its predecessor, which helped drive 1.4x to 1.9x faster inference on leading AI models.
- The B200 features 180GB of HBM3e content, more than double the H100 and a 28% increase versus the H200. In an 8-GPU server configuration, the B200 boasted 1.44TB of HBM content.
- The B300 boasts 288GB of HBM3e content, a 60% increase versus the B200 and over 3.5x more than the H100. In an 8-server configuration, the B300 has 2.3TB of HBM content. This chip is beginning to ship now in Q3-Q4 2025.
Putting in context Nvidia’s rack-scale solutions, the GB200 and GB300 NVL72, shows just how rapidly HBM content is increasing. The GB200 supports up to 13.4TB of HBM content, while the GB300 supports up to 21.7TB of HBM, nearly 34X higher than the 640GB of HBM content in the 8-GPU DGX H100 servers.
AMD is also showing surging memory requirements, to the tune of 3.5X across two main generations:
- The Instinct MI250 featured 128GB of HBM2e memory.
- The MI350X featured 288GB of HBM3e memory, a 125% increase versus the MI250 and on par with Nvidia’s Blackwell Ultra.
- The MI400 series is expected to feature 432GB of HBM4 memory, a 50% increase versus the MI350X and the Blackwell Ultra. In the Helios rack configuration slated for 2026, the MI400 will boast 31.1TB of HBM content, 1.5x more than the GB300 NVL72.
NVIDIA’s Grace CPU Boosts Demand for Micron’s LPDDR5X Memory
When thinking about Nvidia’s GPU platforms, it oftentimes is overlooked that the GB200, GB300 and the older GH200 generations are all paired with Nvidia’s Arm-based Grace CPU (hence the G-based nomenclature). The Grace CPU accelerates CPU-to-GPU connections with Nvidia’s NVLink C2C and helps boost performance and energy efficiency of AI workloads utilizing its Arm Neoverse V2 cores and LPDDR5X (low power double data rate 5) memory.
For example, Micron tested inference performance on Meta’s Llama 3-70B with LPDDR5X memory on the GH200 versus DDR5 on the H100, and found that LPDDR5X delivered 73% less energy consumption with 5x higher throughput and 80% better latency.
The timing and ramp of the GB200 and GB300 throughout the second half 2025 and into 2026 suggests the new LPDDR5X growth curve is at its strongest. To put in perspective, shipments of ~30K GB200/300 racks in 2025 would require more than one million LPDDR5X modules, with each NVL72 rack featuring 17.3TB, or 36 480G modules. If rack shipments double to ~60K in 2026, this would also double LPDDR5X module demand.
Driven by the Blackwell platform, Micron saw revenue from LPDDR5X for servers up 50% QoQ in fiscal Q4 to a record level, though the company did not disclose its exact revenue contribution.
Micron’s Expanding Role in AMD and NVIDIA’s HBM Supply Chain
The HBM market is quite competitive between Micron, Samsung and SK Hynix with Micron historically ranking third. However, Micron plays an increasingly important role in Nvidia’s supply chain, and to a lesser extent, AMD’s. Micron is expanding its presence within HBM, stating in Q4 that it has expanded its HBM customer base from four customers in Q3 to six.
Micron has a range of products designed into Nvidia’s leading platforms:
- Micron’s HBM3e 8-high 24GB cubes are designed into the HGX B200 and GB200 NVL72 platforms.
- Nvidia’s HGX B300 NVL16 and GB300 NVL72 feature Micron’s HBM3e 12-high 36GB cubes.
- Micron’s LPDDR5X supports Nvidia’s GB300 Superchip, with Micron stating in Q4 that “since NVIDIA's launch of LPDRAM in their GB-product family Micron has been the sole supplier of LPDRAM in the data center.”
While Samsung remains a key HBM supplier for AMD, Micron has collaborated with the Nvidia challenger on the Instinct MI350 GPU family as well as its EPYC CPUs. Micron’s HBM3e 12-high 36GB cubes support the MI350X series, while its 128GB DDR5 RDIMM modules support AMD’s 4th gen EPYC CPUs, providing “up to 22% improved energy efficiency and up to 16% lower latency over competitive 3DS through-silicon via (TSV) products.”
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Moving through 2026, the industry is shifting to HBM4 products, where Micron believes it outperforms Samsung and SK in terms of performance and power efficiency. The chipmaker noted it is in active discussions with customers for HBM4 volumes and expects to sell out of capacity for 2026 over the next few months.
This role of supplying both Nvidia and AMD with core memory products and leading on performance and power on the upcoming HBM generation positions Micron well for growth in 2026 and 2027.
Micron Reports Strong 44% Revenue Growth Driven by AI Memory Demand
- Surging AI data center demand drives record FQ4 revenue.
- Strong AI-demand for high-performance memory is creating tight supply, which in turn is driving higher DRAM and NAND prices.
- Data center market growth is complemented by improvement in other end markets.
Micron reported record FQ4 revenue of $11.32 billion. The primary drivers of last quarter’s record revenue were the company’s DRAM segment, specifically High Bandwidth Memory (HBM) products, which benefited from the rapid expansion of AI datacenters.
Revenue growth accelerated 9.4 percentage points sequentially to 46% YoY, and on a sequential basis, growth was 21.7% QoQ, a solid 6.2-point acceleration. Micron guided a fresh record in FQ1 at $12.5 billion at midpoint, pointing to 43.5% YoY growth and a 10.5% sequential growth. Analysts expect revenue growth to accelerate to 60.6% in FQ2.
Micron’s FQ4 revenue growth accelerated by 9.4 percentage points sequentially to 46%, marking continued momentum in AI-driven demand.
FQ4 DRAM revenue grew by 69% YoY and 27% QoQ to $8.98 billion, a second consecutive quarter of strong sequential growth. DRAM revenue accounted for 79% of total revenue. The growth was driven by bit shipments in the low-teens percent sequentially and prices also increased in the low double-digit percentage range.
FQ4 NAND revenue was down (-5%) YoY and up 5% sequentially to $2.25 billion. NAND bit shipments declined in the mid-single digits, and prices increased in the high single digits percentage sequentially due to a favorable mix and tight supply.
Micron benefits from other markets such as smartphones and automotive, represented by the mobile and client business unit (MCBU) up 5% YoY and up 16% sequentially to $3.76 billion.
For FY25, revenue rose 49% YoY to $37.38 billion, driven primarily by DRAM and HBM revenue, which rose more than 62% YoY to $28.58 billion. HBM reached an annualized run rate of $8 billion in FQ4, with HBM share expected to grow again in FQ1 and HBM4 capacity in discussions to soon be sold out for calendar 2026.
Micron has not provided a full-year guide for revenue, but current consensus estimates call for 43% growth to $53.5 billion in revenue.
Micron Leads the AI Memory Supercycle with Record Data Center Growth
The AI-driven demand for memory (especially HBM and high-performance DRAM) is still in the early stages of a multiyear growth cycle. The company’s CEO and Chairman, Sanjay Mehrotra, also mentioned in the recent earnings call, “Memory is very much at the heart of this AI revolution. This means a tremendous opportunity for memory and certainly a tremendous opportunity for HBM."
In fiscal 2025, Micron's data center reached a record 56% of company revenue, with growth primarily driven by DRAM products and aided by data center SSDs and NAND components. Overall, data center revenue increased 137% YoY to $20.75 billion.
Micron’s Cloud Memory Business Unit (CMBU), which consists of its HBM, high-capacity dual in-line memory modules (DIMMs), and low-power server DRAM solutions, saw revenue surge to …
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- Micron’s AI-related segment that surged over 200% last fiscal year and what management is saying about growth in the upcoming fiscal year
- The key line item in the income statement for every AI-related hardware player, and if Micron has what it takes to see sustained, bullish price action
- What Micron’s valuation is communicating and if the stock still has room to run
Micron’s Cloud Memory Business Unit (CMBU), which consists of its HBM, high-capacity dual in-line memory modules (DIMMs), and low-power server DRAM solutions, saw revenue surge to 257% YoY in fiscal 2025 to $13.5 billion, or YoY growth of nearly $10 billion. Micron’s other data center unit, its Core Data Center Business Unit (CDBU), consists primarily of data center SSDs and NAND components. This unit saw revenue growth of 45% YoY to $7.23 billion.
For Q4, CMBU revenue rose 214% YoY to $4.54 billion, while CDBU revenue declined (23%) YoY. CMBU revenue growth was driven by HBM and strong bit shipment growth, though Micron offered no commentary behind the decline for CDBU.
Management expects robust AI server demand, the shift to HBM4 and tight DRAM supply to remain tailwinds to growth and profitability moving through 2026: “we expect healthy demand supply environment in 2026 for overall DRAM, and that bodes well for profitability of DRAM, profitability of HBM and of course, profitability of non-HBM as well, which is experiencing tight supply.”
When looking toward industry-level estimates, Goldman Sachs projected the HBM market to reach $45 to $51 billion, up ~37% YoY at midpoint from Micron’s $35 billion 2025 TAM estimate. With Micron’s HBM share expected to match its DRAM share in the low-to-mid 20% level, this would project HBM revenues likely surpassing $10 billion next year. Over the long run, Micron expects HBM’s total addressable market (TAM) to hit $100 billion or higher by 2030, which assuming some continual share gains would potentially give the chipmaker a $25 billion-plus HBM business by the end of the decade, or more than 4X from 2025.
Micron Clears 50% Gross Margin as Profitability Surges
- Solid margin expansion driven by favorable pricing, improved product mix, disciplined cost management, and operating leverage.
- 50% gross margin bar cleared.
- The growing proportion of higher value products mix to further aid margin expansion.
Micron’s margin turnaround story has been impressive, with gross margin up more than 55 points over the last two years and operating margin up more than 66 points. Adjusted gross margin in Q4 was 45.7%, up 6.7 points QoQ and 9.2 points YoY, aided by strong growth in CMBU which carried a 59% gross margin in the quarter, DRAM pricing, favorable product mix, and cost controls. For Q1, adjusted gross margin was guided to be 51.5% at midpoint, a 5.8 points sequential expansion and up by a solid 12 points YoY.
Adjusted operating margin was 35%, up 8.2 points QoQ and 12.5 points YoY, driven by operating leverage. For Q1, Micron expects adjusted operating margin to be 40.8%, up by 5.8 points QoQ and by 13.3 points YoY, signaling strong operating leverage.
The strong margins are expected to continue in FY2026 due to continued increase in memory prices due to supply tightness, cost controls, and growing proportion of higher value product mix.
Micron’s adjusted gross margin guidance for FQ1 stands at 51.5%, up 12 percentage points year over year.
Gross margin is the key line item for every hardware player in the AI market to see sustained, bullish price movements as it helps to communicate if the stock is participating in a commoditized trend, or if there’s something more secular and unique to the hardware player’s product that can lead to charging higher prices. Of course, driving down costs is also good to see – but nothing beats being able to charge more for a hardware product in terms of communicating the strength of an AI hardware stock.
Micron has a lot it must prove in terms of its lumpy margins yet is off to a solid start by moving from the mid-30% range to expected >50% next quarter.
Adjusted EPS Soars 157% Amid Strong AI Memory Demand
Micron is expected to see earnings double this fiscal year as margins have swiftly recovered from late 2023 and early 2024. In Q4, Micron reported adjusted EPS of $3.03, up 157% YoY and beating estimates by 5.9%.
For Q1, Micron guided for adjusted EPS to be $3.75, +/- $0.15, more than 23% ahead of guidance and corresponding to YoY growth of 110%. Earnings growth is expected to reaccelerate to 155% in Q2 but then decelerate to 126% in Q3. For the full year, Micron is expected to see 100% YoY growth to $16.63 primarily driven by better pricing, cost improvement, operating leverage, and a growing proportion of higher value products.
Micron’s FQ4 adjusted EPS climbed 157% YoY to $3.03, marking a strong earnings rebound as AI-driven demand and pricing strength lifted profitability.
Micron’s Free Cash Flow Surges 10x with AI Memory Boom
- Adjusted free cash flow is on track to improve significantly in FY2026, driven by margin expansion.
Strong revenue and profits are leading to higher cash flows. Micron has seen a significant turnaround in the adjusted free cash flow from (-$5.45 billion) in FY2023 to $368 million in FY2024 and up nearly 10x to $3.72 billion in the recently concluded FY2025.
FQ4 adjusted free cash flow grew by 149% YoY to $803 million or 7.1% of revenue, an improvement of 2.9 percentage points YoY. Management expects adjusted free cash flow to strengthen in FQ1 and to be significantly higher in FY2026.
Valuation
Despite its recent rally, Micron trades at reasonable multiples, well below its peak from 2024. On the top line, Micron trades at 4x forward revenue, 10% above its average 3.6x multiple and far below its peak of 6.8x from mid 2024.
On the bottom line, Micron trades at 11.6x forward earnings, though its 43.9x average is skewed higher by 2024’s >100x multiples when margins were razor-thin. Since the start of 2025, Micron has traded as high as 16x forward earnings and as low as 8x.
Source: YChartsYCharts
Key Risks to Micron’s AI Memory Growth Outlook
Micron’s growth to this point and beyond has been centered around HBM, both on the top and bottom lines. CMBU is the only unit that sees operating margins above the corporate total, at 48% versus 25%, 29% and 20% for its other segments, meaning that future operating margin expansion will be tied solely to growth from CMBU, and felt more the faster CMBU grows. This may mean that margin and earnings upside in 2026 may be limited come 2027.
Conclusion
Micron’s stock has quietly outperformed AI leaders YTD by a wide margin such as Nvidia, Broadcom, Oracle, Meta, Microsoft and more. This has been achieved by AI-related segments surging over 200% YoY, leading to a critical improvement to their margins and by also rebounding to become cash flow positive again.
Clearly, Micron is no longer tied to consumer device cycles. Instead, HBM had led to higher margins and multi-year supplier agreements, resulting in a leveraged approach to participating in the AI infrastructure buildout.
In terms of whether Micron can become more secular, this past year has proven that HBM memory is a component multiplier when compared to GPUs in the hardware stack, as HBM scales faster than GPUs on a per-system basis. Each generation of GPU, from Hopper to Blackwell to Rubin, requires more memory capacity and bandwidth per chip. Therefore, there is compounded effect, as the number of GPUs rises combined with each GPU system requiring more HBM per package.
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