AI Data Centers Revisited: Is Micron Buying After The Monster’s Move?

Parts of Micron Technology (NASDAQ: MU) increased last year due to lack of efficient memory for data centers. The company may see strong financial performance over the next few years, as demand continues to outstrip supply.

The key question investors need to answer before buying Micron today is whether this cycle is different. Will demand driven by artificial intelligence (AI) end industry cycles in memory prices, or will prices eventually fall again, as they have in the past? One scenario could produce huge gains over the next few years, while the other could lead to further declines in the share price.

Will AI create the world’s first billionaire? Our team recently released a report on one little-known company, called “Indispensable Monopoly” that provides essential technology that both Nvidia and Intel need. Continue »

Micron’s latest earnings report provides information that can help investors decide whether the stock is worth buying at today’s price.

In the most recent quarter, Micron’s revenue tripled year over year to $24 billion. Higher memory prices are juice margins, sending earnings per share from $1.41 in the year-ago quarter to $12.07.

AI computing systems, including graphics processing units (GPUs), require advanced memory to process large amounts of data – and currently, the industry can’t make enough of it. Management noted that the premium line continues to fulfill roughly half to two-thirds of consumer demand.

The good news for investors is that solid supply doesn’t appear to be slowing anytime soon. The administration expects the deficit to continue through the end of 2026 and into next year, which should support higher earnings.

Importantly, demand is coming from other markets than data centers. As consumer devices, such as smartphones, use the device’s AI functionality, the demand for memory will grow even more. Micron executives specifically called out the possibility of humanoid robots, which they believe will require the same memory and storage capabilities as a self-driving car.

AI is a driver of strong demand, but it still does not eliminate the cyclical risk of this industry. Micron and its competitors will chase demand by increasing capacity, which could ultimately lead to more flows and lower memory prices.

That extra supply should help Micron in the next few years, depending on how strong the market is. Analysts see earnings rising to $58 per share in fiscal 2026 (which ends in August) and $98 in fiscal 2027, then falling to $77 in fiscal 2028 — a sign that prices could change again as supply increases.

Because long-term returns are uncertain, this is not a stock I would want to buy and hold indefinitely, although it has room to run in the next year or so. Micron averaged 8.3 times forward earnings last year, and now trades at 6.2 times this year’s estimate and 3.6 times next year’s.

The low earnings numbers suggest that investors are not seeing the demand for AI as a sustainable trend in memory prices. Shares could still rise due to today’s shortage, but could fall significantly if the industry increases production capacity. Buyers buying Micron stock should maximize their positions based on their level of volatility.

Before you buy stock in Micron Technology, consider this:

The Motley Fool Stock Advisor a group of analysts have just identified what they believe to be the case The 10 best stocks for investors to buy now… and Micron Technology was not one of them. The 10 stocks that made the cut could produce monster profits in the coming years.

Think about when Netflix made this listing on December 17, 2004… if you invested $1,000 during our promotion, you can earn $501,381!* Or when Nvidia made this listing on April 15, 2005… if you invested $1,000 during our promotion, you can get $1,012,581!*

Now, it is important to realize Stock Advisor’s the total gross profit is 880% – depressed market performance compared to 178% for the S&P 500. Do not miss the latest list of 10, available at Stock Advisorand join an investment community built by individual investors for individual investors.

View 10 stocks »

*Stock Advisor returns as of March 31, 2026.

John Ballard has no position in any of the products mentioned. The Motley Fool ranks and recommends Micron Technology. The Motley Fool has a publicity strategy.

AI Data Centers Revisited: Is Micron Buying After The Monster’s Move? was originally published by The Motley Fool