Driven by sustained demand from artificial intelligence, shares of memory chip leader Micron Technology (MU) surged more than 11% on Tuesday, closing at $640.20. Its market capitalization rose to approximately $721.98 billion, surpassing the $700 billion threshold for the first time in history.
One of the key factors driving the stock price increase is a reassessment of the cyclical nature of the memory chip industry. A recent report from research firm IDC points out that, supported by AI demand, the memory chip market is expected to break free from traditional cyclical fluctuation patterns. The memory chip sector has long been undervalued due to its strong cyclical characteristics, but the sustained demand growth brought by AI is changing the market’s perception of the industry.
Micron’s recent stock performance has been exceptionally strong: it rose about 53% in April alone, and approximately another 24% so far in May. Its cumulative increase this year stands at 124%, adding about $395 billion in market value. Over the past 12 months, the stock has skyrocketed nearly 696%, increasing its market capitalization by more than $620 billion. In just the last three trading days, the company’s market value has grown by about $133 billion.
Peer companies such as Western Digital (WDC), Seagate Technology (STX), and SanDisk (SNDK) have risen approximately 170%, 180%, and 492% respectively so far this year. Analysts point out that the surge in demand for data storage from AI applications has made memory chips a crucial component of AI infrastructure. However, the AI investment boom has also put pressure on hard drives and the storage supply chain, with capacity constraints gradually becoming apparent. An analyst from Melius noted that memory chips are becoming a core link in the AI industry chain. Data shows that among the 50 analysts tracking the company, Micron’s average rating remains a “Buy,” with a price target of $583.83.
Micron recently announced that it has begun shipping a solid-state drive with a massive capacity of 245TB, named the Micron 6600 ION SSD. The company calls it “industry-leading” and “the world’s highest-capacity commercial SSD,” claiming its “energy efficiency far exceeds that of traditional hard drives.” Micron states that the product is designed specifically for data centers, “aimed at supporting AI, cloud computing, enterprise, and hyperscale workloads.” The company claims that one storage rack equipped with the 6600 ION can accomplish the workload of approximately five racks equipped with traditional hard drives.
Micron supports its claims with a series of data points: compared to hard-drive-centric systems, it offers “84x better energy efficiency,” “8.6x faster AI preprocessing speeds,” and “29x lower latency.” Micron also states that its NAND flash memory is a full generation ahead of competitors. Considering that Micron’s stock trades at 27 times its earnings, while SanDisk’s stock trades at 43 times its earnings, the choice for investors appears relatively clear.
