Micron Stock Investors Just Got Good News From Wall Street and Nvidia CEO Jensen Huang

Shares of Micron Technology (NASDAQ: MU) have advanced 240% year to date. That makes it the second-best-performing stock in the S&P 500 (SNPINDEX: ^GSPC), the first being rival memory-chip maker Sandisk, which has added more than 600% in 2026.

Micron shareholders recently got some good news. Several Wall Street analysts raised their forward earnings estimates after the company's latest financial report. Additionally, Nvidia (NASDAQ: NVDA) CEO Jensen Huang says demand for memory chips will continue to outpace supply for several years.

Here's what investors should know.

Image source: The Motley Fool.

Micron's customers are signing unprecedented multiyear deals

Micron develops and manufacturers memory and storage solutions based on NAND flash and dynamic random-access memory (DRAM) chips. Both types of memory are critical to artificial intelligence (AI) workloads. NAND and DRAM serve as long-term storage and working memory, respectively. And high-bandwidth memory (HBM) is a specific type of DRAM that feeds data to graphics processing units at very high speeds.

Micron is not the market leader in any segment. In fact, the company is actually tied with Sandisk for fourth place in NAND, it ranks third in DRAM, and it's tied with SK Hynix for second place in HBM, according to Counterpoint Research. But Micron has still benefited greatly from the unprecedented memory-chip supply shortage created by the AI infrastructure build-out.

In the third quarter of fiscal 2026 (ended in May), total revenue rose 345% to $41.4 billion due to particularly strong sales growth in the cloud and data center segments, as NAND and DRAM prices more than doubled versus the previous year. On the bottom line, non-GAAP (adjusted) net income increased more than 1,200% to $25.11 per diluted share.

The best news came from CEO Sanjay Mehrotra. He said Micron has now signed 16 multiyear agreements with customers that include "binding commitments to purchase specific volumes" of chips. Such deals are unprecedented in the memory-chip industry, which has historically run on contracts measured in days, and they afford Micron greater visibility into future cash flows.

Mehrotra also told analysts that physical AI products -- autonomous cars and robots -- would keep memory-chip demand elevated for decades to come. "We expect a sustained, substantial multidecade memory demand cycle to begin in the latter part of this decade."

Several Wall Street analysts dramatically raised earnings estimates for fiscal 2027

Memory-chip sales have historically been highly cyclical. The industry has oscillated between periods of too little supply (and price hikes) and periods of too much supply (and price cuts). But Micron's multiyear contracts include floor prices that should moderate (or even eliminate) that cyclicality in the future.

Consequently, many Wall Street analysts have dramatically raised their forward earnings estimates. The consensus now says earnings will hit $155 per share in fiscal 2027 (ends in August), up from the prior estimate of $98 per share. The new forecast implies earnings will increase 168% annually over the next five quarters.

Nvidia CEO Jensen Huang says the memory-chip supply shortage will last for several years

At the tech event CES in January, Nvidia CEO Jensen Huang explained that memory was quickly becoming the most critical bottleneck in AI inference workloads. Not only are more people interacting with AI applications, but their interactions are getting longer, and the underlying models are getting larger. AI systems need more memory to support those changes.

Six months have passed since Huang made those observations, and the situation has not improved. "The whole industry supply chain, everything from wafers to packaging to silicon photonics, everything is in short supply because the demand is so high. It is going to persist for several years," Huang told reporters in South Korea in June.

That's good news for Micron (and other memory-chip makers). While it does not mean the industry has escaped cyclicality, it does point to strong demand for the foreseeable future. So it's reasonable to think Micron will continue to deliver strong financial results for many quarters to come.

Trevor Jennewine has positions in Nvidia. The Motley Fool has positions in and recommends Micron Technology and Nvidia. The Motley Fool has a disclosure policy.