Micron valuation surges as AI demand drives memory shortage

US memory maker Micron briefly surpassed the market valuations of Meta and Tesla on Thursday, driven by a stock surge as Wall Street recalibrates its view of the company. This marked the first time Micron’s valuation surpassed those of the two tech giants, though it floated back down by Friday. Micron’s stock rose over 236% in the past month, closing Friday’s trading at $1,132 per share. For comparison, the stock spent years before mid-2025 at below $100. On Friday, Micron closed trading with a market cap close to $1.27 trillion, while Meta stood at $1.39 trillion and Tesla at $1.42 trillion.

The valuation rise is fueled by a supply shortage of memory chips, dubbed “RAMageddon,” which is predicted to persist into 2027. AI data centers require system memory, including DRAM (Dynamic Random Access Memory), NAND (a type of non-volatile storage technology), and HBM (High-Bandwidth Memory). This demand has triggered buying from AI system makers like Nvidia and hyperscalers such as Microsoft, Amazon AWS, Google, and Oracle, forcing device makers like Dell, HP, and Apple to secure their own supplies. According to Sebastien Naji, a tech analyst at financial firm William Blair, demand growth continues to outpace the rate that new cleanroom space can come online.

This supply-demand imbalance drove growth in Micron’s latest earnings:

• Third-quarter revenue: $41.45 billion.
• Net profit: Rose to $28.2 billion, up from $1.88 billion in the same period last year.
• Fourth-quarter forecast: Revenue is expected to land between $49 billion and $51 billion.

To protect itself against the memory industry’s historical boom-and-bust cycles—where manufacturing expansions often collide with sudden drops in demand—Micron is shifting its business model. The company has signed 16 strategic customer agreements (SCAs) across the data center, consumer, and automotive segments, which it expects will transform its business model. These include supply agreements with Nvidia and AI lab Anthropic to secure long-term demand.

Naji highlighted the impact of these agreements on Micron’s financial outlook. “Given the strong likelihood of continued ASP growth in the coming quarters and improving revenue visibility thanks to a rapidly expanding set of long-term agreements (SCAs) with key customers, we see potential for more durable earnings growth and reiterate our Outperform rating,” Naji wrote, referring to Average Selling Price (ASP).

Why it matters

Micron is attempting to break the traditional boom-and-bust cycle of memory chip manufacturing by locking in long-term supply agreements with major AI players, signaling a shift in how Wall Street values the company.