Micron's revenue soars with high-bandwidth memory demand

In the realm of technology, demand for artificial intelligence infrastructure has been a pivotal factor driving various companies' growth, particularly Micron Technology, Inc. Established as a key player in memory products, Micron has experienced significant success due to the increasing need for high-bandwidth memory (HBM) products. The company's revenues surged from $21 billion in 2023 to $34 billion in 2024, marking an impressive rebound from a previous downturn. This salient growth is representative of a broader trend in the technology sector, highlighting the importance of HBM in supporting AI applications. The necessity of HBM is predominantly due to its capability to supply bandwidth and deliver low latency, which standard dynamic random-access memory (DRAM) cannot match, especially when it comes to large language models used in AI. Micron is prominently noted as a principal supplier for notable platforms such as Nvidia's Blackwell GB200 and AMD's Instinct MI350 series GPUs. This heightened demand for memory in AI systems has resulted in escalated requirements, leading newer generations of chips like Nvidia’s Blackwell systems to require 33% more memory per node compared to their predecessors. Nonetheless, ramping up HBM production is not without its challenges. The manufacturing process is notably more intricate than that of conventional DRAM, requiring approximately three times as many wafers to yield the same number of bits, mainly due to the lower bit density and complex 3D stacking seen in HBM. This limitation creates a natural bottleneck for production capacity, which is further exacerbated by the existing competition within the industry. As of now, SK Hynix controls roughly 50% of the HBM market, showcasing its dominance in production capabilities, particularly with the upcoming HBM4 technology. Despite these challenges, the outlook for Micron remains positive. Projections indicate a robust annual revenue growth of 25% from FY 2026 through FY 2028, positioning Micron to generate approximately $77 billion in revenues and a net income of about $17 billion if net margins reach 22% by FY 2028. With a projected forward price-to-earnings ratio of about 20x, this would imply that Micron's market capitalization could ascend to around $340 billion, indicating the potential for nearly doubling its current stock price. In summary, while competition poses certain risks, Micron's strategic positioning within the booming AI memory market suggests a bright and potentially lucrative future.