HBM Drives Micron's Growth: Can MU Sustain the Momentum?

Micron Technology, Inc. MU is experiencing a surge in demand for its High Bandwidth Memory (“HBM”), driven by the rapid adoption of artificial intelligence (AI). On its third-quarter fiscal 2025 earnings call, the company confirmed that its entire HBM supply for the calendar year 2025 is sold out.

Micron Technology expects HBM demand to jump from around $18 billion in 2024 to $35 billion in 2025, with continued growth in 2026. MU believes that its next-gen HBM4 products, offering more than 2 terabytes per second bandwidth and 20% lower power usage, will be crucial in meeting this rising demand.

In the third quarter, Micron Technology’s HBM revenues ramped up sharply, registering 50% growth sequentially. The company now expects its HBM market share to match its DRAM share in the second half of 2025, earlier than previously planned. Volume shipments of its 12-high HBM3E are underway, and HBM4 sampling has begun for 2026 platforms.

HBM demand is set to outpace overall DRAM growth, creating tight supply conditions. Micron is investing heavily in new capacity, including expanding its backend manufacturing capacity, and plans to bring more HBM capacity online in Singapore by 2027.

At present, Micron Technology appears well-positioned in the AI memory race, which is likely to continue driving its top-line performance. The Zacks Consensus Estimate for fiscal 2025 and 2026 revenues indicates year-over-year growth of 47% and 33.9%, respectively.

How Do Micron’s Rivals Stack Up in the HBM Race?

Although there are no U.S. stock exchange-listed direct competitors for MU in the memory chip space, Intel Corporation INTC and Broadcom Inc. AVGO play key roles in the HBM supply chain and AI hardware ecosystem.

Intel is developing its AI accelerators that rely on high-performance memory like HBM. Although Intel doesn't manufacture HBM chips, its Gaudi AI chips will require a robust HBM supply, and any shift in memory partnerships could impact Micron's position.

Meanwhile, Broadcom designs custom application-specific integrated circuits used in AI infrastructure that often include integrated HBM. As demand for Broadcom’s AI chips grows, it could influence how HBM suppliers like Micron allocate their future supply.

Micron’s Price Performance, Valuation and Estimates

Shares of Micron Technology have risen around 39.8% year to date compared with the Zacks Computer – Integrated Systems industry’s gain of 25.9%.

From a valuation standpoint, MU trades at a forward price-to-sales ratio of 2.68, lower than the industry’s average of 3.65.

The Zacks Consensus Estimate for Micron Technology’s fiscal 2025 and 2026 earnings implies a year-over-year increase of approximately 518.5% and 62.4%, respectively. Estimates for fiscal 2025 and 2026 have been revised upward in the past 30 days.

Micron Technology currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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