Micron Technology: AI Memory Demand Is Still in the Early Innings (NASDAQ: MU)

Memory chip demand has surged remarkably as technology companies have ramped up their data center infrastructure spending in recent years. Micron Technology (NASDAQ: MU) has benefited immensely from this boom, and with the memory market forecast to reach more than $1 trillion in 2027 -- up from over $800 billion this year -- the growth phase of this cycle isn't done just yet.

Here's how the company is benefiting, and why buying some Micron stock and holding it for the long term is likely to prove a good choice.

Image source: Micron Technology.

Micron's management believes memory demand has a long runway for growth

In the past, the memory chip market has been highly cyclical. As new markets for memory open, demand initially surges, and prices rise. In response, the handful of suppliers in the market move to expand their production capacity so they can benefit. But eventually, supply outstrips demand (which may also wane organically), and prices tumble again. The result: significant boom-and-bust cycles.

Some people have worried that this soaring memory market is just another up phase in another normal cycle. Still, the latest research from McKinsey shows that the overall AI semiconductor market is booming, and forecasts that it will reach between $1.5 trillion and $1.8 trillion by 2030, with memory processors accounting for nearly 30% of the total market.

And Micron's management is bullish on the company's long-term prospects in this market, too.

"The memory industry has been structurally transformed by the proliferation of AI," said CEO Sanjay Mehrotra on the fiscal Q3 2026 earnings call. "We are only in the early innings of the significant innovation and productivity that can be unleashed in every part of the global economy over time."

The back-and-forth debate right now around AI is about when the spending spree on artificial intelligence infrastructure will slow down, but what's interesting about Mehrotra's comments is his focus on the premise that it's not just data centers that will need lots of memory.

"Exciting possibilities enabled by robotics and humanoids, as well as fully autonomous vehicles, portend a robust long-term demand environment for memory and storage," he noted.

In short, his views on the outlook for memory demand are based on the idea that the nascent robotics and self-driving vehicle markets are headed for rapid expansion. These new technologies will likely need a lot of memory to support their advanced AI systems and make complex real-time decisions.

Morgan Stanley estimates there will be 1 billion humanoid robots globally by 2050, with a potential market size of $5 trillion. With that opportunity ahead of it, Micron's management is likely right to be bullish on its long-term prospects.

Micron is already benefiting immensely from memory demand

Micron's shares have risen 687% over the past year as the company has successfully tapped into rising memory demand.

Sales surged 45% in the fiscal third quarter to nearly $41.5 billion, and its non-GAAP (adjusted) earnings jumped more than 1,300% year over year to $24.67 per share.

If this phase of growth in memory demand is truly just getting started, there's still plenty of time for investors to benefit from Micron's opportunity. And you don't even have to pay a premium to own it. Micron's stock trades at a price-to-earnings (P/E) ratio of just 23, which makes it a relative bargain compared to the average P/E ratio of 37 for the tech sector.

All of which means now may be a great time to buy shares of this memory stock.

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy.