Why Micron Stock Popped Today
Key Points
HBM prices are surging.
Micron is surging HBM production in Taiwan.
This won't start to happen before 2028, however.
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Micron (NASDAQ: MU) stock jumped 6.3% through 9:50 a.m. ET Monday after announcing it completed purchase of a Taiwanese production site from Powerchip Semiconductor Manufacturing Corporation (PSMC).
The 300,000-square-foot cleanroom facility will be upgraded and expanded to focus on DRAM production, including high-bandwidth memory (HBM) chips used in artificial intelligence.
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Image source: Micron.
News... sort of
This isn't a surprise. Micron announced in January it would buy the Tongluo site from PSMC. Today's news just makes the purchase official and final. Nor will HBM production increase immediately. Refitting the facility will take time, and Micron doesn't expect "meaningful" production to begin before fiscal 2028.
Long term, though, the boost in production should be significant. Currently set up for production of ordinary DRAM semiconductors, the retrofitted facility will be more advanced -- and much bigger. The planned expansion will nearly double the amount of cleanroom space to 570,000 square feet and will collaborate with Micron's existing Taiwanese HBM facility.
What does it mean for Micron stock?
HBM prices are surging due to increased demand and insufficient supply to meet it. The forecast is current for basic DRAM prices to rise 50% to 55% sequentially in Q1 2026, versus Q4 2025, with price increases for HBM memory rising even faster.
Micron's already profiting from this trend, with sales up 57% last quarter, and profits up 180%. Forecasts for the coming quarter's results anticipate the revenue growth rate accelerating to 138%, and the profits growth rate -- to more than 450%!
Even at a share price 40 times trailing earnings, Micron stock looks cheap if this rate of growth continues. It makes sense the company would want to capitalize by increasing production. The big worry: What if increased production eliminates the supply deficit... and drives prices back down?
That's why Micron is called a cyclical stock.
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Rich Smith 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.
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