Here's the Major Winner of Amazon's 2026 $220 Billion Capital Expenditure Bill

Amazon (NASDAQ: AMZN) holds the record for the biggest spender in 2026's AI arms race. It's planning to spend $220 billion in capital expenditures this year, up from its initial $200 billion projection. And on its Q2 earnings call, Amazon cited one component as the driver of increasing its projection by $20 billion: memory.

There are a handful of memory chip manufacturers, but chief among them is Micron (NASDAQ: MU). Micron is a major player in this sector, and this forecast increase should give Micron investors confidence that the memory chip boom isn't just a flash in the pan; it could last for years.

Image source: Getty Images.

Multiple projections point toward lasting data center demand

During Amazon's conference call, it also pointed out that even with its $220 billion in capital expenditures (capex), it wouldn't be able to obtain enough computing capacity to meet demand. This is bullish news for several companies in the AI industry, including Amazon itself. Amazon noted that its clients are still in the early stages of deploying AI on a wide scale, and that the amount of inference workloads will skyrocket in the near future. That means more computing capacity, which translates into huge demand for memory chips -- a commodity whose availability is already slim.

Memory prices have skyrocketed this year due to insufficient supply amid surging demand. This translates into rising prices, benefiting companies like Micron, but costing consumers and AI hyperscalers a ton of money. However, the demand is clearly still there despite price hikes, so that points to potentially higher memory prices a year from now.

That is music to Micron investors' ears, as it could have a lot of room to run.

Micron's stock is cheap if the memory chip crunch drags into 2028

The memory chip producers aren't satisfied with their current capacity, so many are building new facilities to increase supply. However, there's no saying that what they bring online will be enough, and prices could remain elevated even after some of them start production. That's why Micron's management team told investors it expects market tightness to persist beyond 2027, indicating several quarters of strong growth ahead for Micron.

Wall Street analysts back up this projection, as they estimate that Micron's revenue will increase at an 85% pace during fiscal year 2027, ending August 2027. Furthermore, its earnings per share are projected to rise from $73.43 in fiscal year 2026 to $155.56 in fiscal year 2027. Those are explosive growth rates, and will be easy to achieve if AI hyperscalers spend more in 2027 and memory chip prices stay high or rise.

However, the market isn't pricing this possibility into Micron's stock. Right now, it trades for 5.3 times fiscal year 2027 earnings.

MU PE Ratio (Forward 1y) data by YCharts

That's not an expensive price tag for Micron's stock, and if memory chip demand stays elevated for the foreseeable future, it could lead to a far higher stock price.

The biggest issue holding Micron's stock back is that no one knows how long the current wave of memory chip pricing strength will last. The memory chip market goes through boom-and-bust cycles regularly, with nobody able to predict the end. However, there is emerging evidence that this could be the longest-lasting memory chip boom yet. During its conference call, Amazon told investors it won't be able to bring enough computing capacity to meet demand in 2026, and likely sees that pattern extending into 2027 as well. Furthermore, demand for 2028 is already starting to pop up due to the shortages during the next year and a half. All of that points to the memory chip cycle lasting for a lot longer than normal, making Micron a solid investment right now while it's on sale.

Keithen Drury has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Micron Technology. The Motley Fool has a disclosure policy.