Micron shares surged 16% as profit forecasts rose due to a global memory chip shortage

Shares of Micron Technology rose nearly 16% on Thursday, following a worldwide supply crunch of memory chips amid strong demand from AI data centers.

Memory shortages across industries — from smartphones to sprawling data centers — have driven up prices, prompting Micron to forecast second-quarter adjusted profit nearly double Wall Street’s expectations.

Analysts at Morningstar wrote in a note that this dynamic “fueled incredible market valuations for Micron and its memory chip peers.”

“The current cyclical upturn is generating tremendous shareholder value.”

Micron is one of only three major suppliers of high bandwidth memory (HBM) chips needed for AI technology, along with South Korea’s Samsung and SK Hynix.

Micron’s share price has risen more than 160% this year, while South Korea-listed shares of Samsung and SK Hyninx have more than doubled and tripled, respectively.

Micron is set to add more than $40 billion to its market capitalization, if gains take hold.

Equilibrium of demand-supply dynamics

Micron CEO Sanjay Mehrotra has said that he expects the memory market to remain tight after 2026.

Memory is a highly cyclical industry, typically experiencing extreme lows and highs with volatile price levels.

While analysts differ in their estimates of how long the ongoing upswing, routinely referred to as a “supercycle,” will last, Wall Street unanimously agrees that supply shortages may outpace Micron’s estimates despite efforts to expand capacity.

The memory chip maker has raised its 2026 capital spending plan to $20 billion, as it ramps up investment to meet booming demand.

However, Morningstar’s analysts see supply tightness continuing well into 2027. JPMorgan analysts also expect supply shortages to persist through 2027, as Micron balances supplies to data centers and key customers in other industries, such as Apple.

Global smartphone shipments are expected to fall 2.1% next year as rising chip prices could affect demand, research firm Counterpoint said on Tuesday.

Handset providers such as Apple and Samsung are likely to continue to have relatively stable access to memory chips, DA Davidson analyst Gil Luria said, adding that other “lower-value” Android-based handset providers, in contrast, are vulnerable to shortages due to their low-cost memory content.