DRAM Investors Say This Time Is Different: Micron Technology’s Bold Plans

One of the standout success stories in the stock market over the past year has been Micron Technology (MU), whose stock has surged nearly 300% amidst a generational shortage in memory and storage. The company’s robust portfolio, which includes both DRAM memory and NAND flash storage, has positioned it as a leader in a highly competitive sector. Yet, with Micron announcing plans to invest an eye-watering $200 billion in new memory fabs in the U.S. alone, many market watchers are left wondering: is this a sign of future growth or a potential red flag for investors?

Micron’s Significant Growth

During the summer of 2025, a pivotal change occurred in the tech landscape. The artificial intelligence (AI) industry shifted from a training-focused to an inference-driven model, leading large hyperscalers to announce ambitious projects to supply AI laboratories like OpenAI and Anthropic. Consequently, memory demand escalated sharply and has remained elevated. A recent report from Counterpoint Research highlighted that prices for both memory and NAND storage surged over 90% in the first quarter, with projections for an additional 20% increase in the second quarter.

In response to this unprecedented demand, Micron has accelerated its DRAM fabrication expansion plans. The company is investing approximately $50 billion in two new fabs located in Idaho—its home state—and another $100 billion on a colossal facility near Syracuse, New York. With an additional $50 billion earmarked for research and development, the ambitious total exceeds $200 billion in the U.S. alone over an unspecified timeline. Beyond U.S. borders, they are also investing nearly $10 billion in Hiroshima, Japan, and exploring acquisitions in Taiwan.

An Eye on Cyclical Risks

While Micron’s expansive plans have captivated investors, potential risks loom large. Investors might be concerned that this cycle mirrors previous ones where cyclical companies, in response to rising prices, ramp up supply. Such strategies can lead to artificial demand, often resulting in a sharp drop when the new supply arrives. For context, following the COVID-19 pandemic, the memory boom turned into one of the most severe downturns in history as interest rates rose and consumer demand dipped.

The cyclical nature of the memory market raises questions: could Micron and its peers be setting themselves up for a significant crash? The industry’s history shows that rapid supply increases often correlate with subsequent demand drops, leading to reduced prices and profitability.

How This Time Might Be Different

Despite possible risks, there are reasons why Micron investors may choose to remain optimistic. The current AI boom appears unique compared to prior technology surges. Specifically, it is driving demand for a new type of DRAM known as high-bandwidth memory (HBM). Unlike traditional DRAM, HBM incorporates stacked modules connected via through-silicon vias, making it significantly more capital-intensive to produce.

The demand for HBM appears inelastic, meaning AI companies are likely to purchase it at any price to maintain competitiveness. While some production equipment has been shifted from traditional DRAM to HBM, this change has paradoxically decreased the supply of traditional DRAM, which is also seeing heightened demand due to AI integration into existing tech like PCs and phones.

Earnings and Market Cap Expectations

Analysts project that Micron will earn $33.92 per share for the fiscal year ending August and $44.55 per share by fiscal 2027. Given recent performance and the significant price increases reported, these estimates may be on the conservative side. Top estimates for 2026 and 2027 reach as high as $41.89 and $63.01 per share, respectively. At a stock price around $415, these earnings could account for over 25% of Micron’s current market capitalization within the next two years.

While new supply is expected in the coming years, there’s no guarantee it will drive prices back down to previous levels. Even if per-bit prices decline, an increased volume of sales could mean steady earnings for Micron.

Key Factors in the Equation

The bullish trajectory for Micron hinges mainly on one crucial element: the sustained demand for HBM. Its inelastic nature and capital-intensive production constitute a structural barrier to rapidly ramping up supply. If the industry sees the emergence of a lower-cost alternative to HBM, or if AI growth plateaus, the current bullish sentiment could falter.

Thus, while there are two significant risks—disruptive technological advancements and potential growth limitations in AI cultivation—neither seems imminent at this stage. This ongoing scenario might support a cautious sense of confidence among Micron shareholders, encouraging them to hold the stock for potential future gains.