William Blair has commenced coverage on Micron Technology, recommending an Outperform rating, as it anticipates robust profit acceleration propelled by a convergence of rising artificial intelligence (AI) memory requirements and persistent supply shortages expected to stretch through 2027.
The firm identifies a multi-year memory cycle surge that will enhance pricing power and profit margins, mainly through high-bandwidth memory (HBM) utilized in AI acceleration devices. Memory has emerged as a pivotal constraint in AI systems, steering customers towards premium, higher-priced memory products.
William Blair projects that Micron's non-GAAP earnings per share will climb by over 275% within the upcoming two fiscal years. This surge is largely attributed to the scaling complexity and size of AI models, which necessitates chips integrating increased memory capacity, elevating memory's cost proportion in total system pricing.
As the second-largest supplier of HBM, Micron is forecasted to achieve a 164% leap in HBM-related revenues during fiscal year 2026, followed by an additional 40% growth in fiscal 2027. The momentum extends across Micron's broader portfolio, encompassing DRAM and NAND technologies.
Micron's fiscal 2025 revenue profile remains predominantly concentrated in DRAM, which constitutes approximately 77%, with the remainder deriving from NAND. William Blair analysts anticipate a market shift favoring high-value offerings such as DDR5 and LPDDR5X, expected to drive both volume growth and pricing power. The supply constraints evident in non-HBM DRAM are compounded by manufacturing capacity being reallocated towards HBM production. Given the lengthy timelines for new fabrication facilities, relief appears unlikely in the near term.
The report estimates that the upcoming AI infrastructure expansion alone could inject roughly $100 billion into the memory sector by 2028 stemming from HBM demand. HBM products typically command prices four to five times that of standard DRAM and occupy greater wafer capacity per bit, underpinning margin enhancements.
Potential risks highlighted include intensified competition from Samsung, Micron’s substantial planned capital expenditure nearing $20 billion for fiscal 2026, and the possibility of the supply-demand imbalance diminishing over time. Nevertheless, William Blair maintains that Micron’s valuation remains justified amid constrained supply conditions and foresees continued share price appreciation throughout the AI-driven product cycle.