Artificial intelligence has transformed the semiconductor landscape, and Micron Technology (NASDAQ:MU) has been one of the biggest beneficiaries. Micron stock has delivered extraordinary gains over the past year as hyperscalers ramped up spending on AI data centers, driving intense demand for advanced memory chips.
However, competition in high-bandwidth memory is intensifying. Reports that Samsung Electronics is nearing certification from Nvidia (NASDAQ:NVDA) for its next-generation HBM4 chips have introduced new uncertainty. With Micron stock trading near record highs, investors are asking a critical question: is this still a buy, or is it time to take profits?
Micron Stock’s Explosive AI-Driven Rally
Micron stock has staged a remarkable run, soaring 336% over the past year. During that same period, the broader S&P 500 Index ($SPX) gained just 12%. After hitting a record high of $455.50 last month, shares remain only about 9% below that level.
The rally has been fueled primarily by surging demand for memory chips used in AI accelerators and data centers. High-bandwidth memory plays a crucial role in AI systems, enabling processors to handle massive datasets at ultra-fast speeds. As companies like Nvidia continue to ship advanced AI GPUs, the need for cutting-edge memory solutions has skyrocketed.
Micron, headquartered in Boise, Idaho, designs and manufactures DRAM, NAND, and NOR memory products used across cloud infrastructure, mobile devices, and edge computing platforms. Its scale and technical expertise have positioned it as a key supplier in the AI memory ecosystem.
With a market capitalization of roughly $465 billion, Micron has evolved into one of the most influential players in the semiconductor industry.
Rising Competition in High-Bandwidth Memory
Despite the strength of Micron stock, competitive dynamics are shifting. Samsung Electronics is reportedly close to receiving certification from Nvidia for its HBM4 chips. Certification is a critical milestone, as Nvidia relies heavily on high-performance memory suppliers for its AI processors.
If Samsung begins mass production of next-generation HBM earlier than expected, supply in the AI memory market could increase more rapidly than anticipated. That development may pressure pricing and reduce Micron’s market share in high-margin segments.
High-bandwidth memory is not just another product category. It is central to AI accelerators, which are currently among the fastest-growing segments in technology. Any change in supplier relationships could ripple through the industry and influence revenue trajectories for memory manufacturers.
While Micron remains a leading provider of advanced memory, the emergence of stronger competition raises valid questions about how sustainable its current growth pace will be.
Valuation Remains Reasonable
One reason many investors continue to favor Micron stock is valuation. Even after its massive rally, shares trade at approximately 12.6 times forward earnings. That is well below the semiconductor sector median of 23.6 times.
For a company benefiting directly from the AI boom, that multiple appears modest. The discount suggests that investors may be pricing in cyclical risks or competitive pressures.
Historically, memory stocks have been highly cyclical, with earnings swinging dramatically based on supply and demand imbalances. The current AI-driven upcycle has produced record revenue and margins, but markets tend to anticipate normalization well before it occurs.
Thus, while Micron stock may not look expensive today, investors must consider how durable current pricing strength will be once supply expands.
Record-Breaking Financial Performance
Micron’s recent financial results reinforce why enthusiasm remains high. In its fiscal first quarter of 2026, the company reported revenue of $13.6 billion, up 57% year over year and well above consensus estimates of $12.7 billion.
The company posted its third consecutive quarter of record revenue. DRAM sales surged 69% to $10.8 billion, representing 79% of total revenue. NAND revenue rose 22% to $2.7 billion.
Cloud memory revenue doubled year over year to $5.28 billion, while core data center revenue increased 4% to $2.38 billion. Management attributed much of the growth to higher pricing, supported by tight supply conditions.
Profitability expanded sharply. Adjusted gross margin climbed to 56.8%, up from 39.5% a year earlier. Adjusted earnings per share soared 167% to $4.78, significantly ahead of the $3.78 estimate.
Looking forward, Micron projected fiscal second-quarter revenue of approximately $18.7 billion and adjusted EPS of $8.42. Management indicated that AI-driven demand and supply constraints are likely to persist through 2026, potentially sustaining strong pricing.
Analyst Sentiment Remains Bullish
Wall Street’s view of Micron stock remains overwhelmingly positive. Of 42 analysts covering the shares, 33 rate it a Strong Buy, six assign a Moderate Buy, and only three recommend holding the stock.
Even after the dramatic rally, the highest price target on the Street stands at $500, implying roughly 21% upside from current levels. While the average target has already been surpassed, the continued optimism reflects confidence in the AI memory cycle.
Analysts appear to believe that demand from hyperscalers, enterprise AI deployments, and edge computing will continue to drive growth.
Buy, Sell, or Hold Micron Stock?
The investment case for Micron stock hinges on two factors: the durability of AI-driven demand and the impact of rising competition.
On the bullish side, Micron is delivering record revenue, expanding margins, and trading at a valuation that remains below sector averages. Strong pricing and tight supply conditions have created a powerful earnings tailwind.
On the cautious side, memory markets are cyclical, and new supply from competitors like Samsung could eventually moderate pricing power. If hyperscaler spending slows or supply ramps faster than expected, earnings could normalize quickly.
For long-term investors who believe in sustained AI growth, Micron stock still appears attractive, particularly given its valuation. However, after a 336% surge, volatility should be expected.
In short, Micron stock remains fundamentally strong, but rising HBM competition introduces new risk. Investors should weigh their time horizon and risk tolerance carefully before deciding whether to buy more, hold existing shares, or lock in gains.
Featured Image: Megapixl
