Micron’s AI-Driven Supply Crunch Fuels Record Valuation

The insatiable demand for artificial intelligence infrastructure continues to propel Micron Technology to unprecedented heights. As the company’s shares hover near record levels, it is confronting a significant operational challenge: its entire 2026 calendar year supply of memory chips for AI applications is already sold out. This deepening shortage has prompted analysts to issue aggressive price target upgrades, with warnings that supply constraints are intensifying.

Central to the current bullish sentiment is a radical operational pivot confirmed by CEO Sanjay Mehrotra. Production capacity for High-Bandwidth Memory (HBM), a critical component for AI servers, is fully allocated through the end of 2026. Both pricing and volume agreements with customers are firmly locked in.

To meet this overwhelming demand for high-margin AI chips, Micron’s management is making decisive moves. The company will discontinue production of its consumer-focused "Crucial" brand to free up manufacturing resources. Final shipments to the consumer market are scheduled for as early as February 2026, underscoring a sharpened focus on the more profitable B2B and data center segments.

Analyst Outlook: Soaring Targets and a "Supercycle"

Market experts are responding to these developments with dramatically revised forecasts. On January 20, TD Cowen analyst Krish Sankar raised his price target for Micron from $300 to $450, reiterating a Buy rating. Sankar argues the chip shortage is not easing but worsening, a dynamic he expects to support Micron's profitability well beyond 2026.

Should investors sell immediately? Or is it worth buying Micron?

Projections indicate average selling prices for server memory could surge by up to 200% year-over-year in the second half of 2026, potentially stabilizing at these elevated levels. Analysts at William Blair forecast a nearly 300% profit jump for the 2026 fiscal year. HBM revenue alone is anticipated to grow by 164% in the current year.

Valuation Remains Compelling Despite Rally

Even after a powerful rally that has brought shares to $401.40—within striking distance of their 52-week high—Micron’s valuation appears moderate relative to its peer group. The stock trades at an estimated forward price-to-earnings ratio of approximately 11. This contrasts with significantly higher multiples for rivals such as Nvidia (around 24) and AMD (approximately 35).

To capitalize on what analysts are terming a "supercycle," Micron has outlined plans for $20 billion in capital investments for the current fiscal year. Supporting this long-term view, a recent IDC report suggests the undersupply in the memory market could persist into 2027. This outlook is further fueled by next-generation technologies like Nvidia’s upcoming Rubin chips, which are expected to require even greater memory bandwidth.