Elon Musk Has Incredible News for Micron Stock Investors

Space Exploration Technologies and Tesla (NASDAQ:TSLA) CEO Elon Musk has given shares of Micron Technology (NASDAQ:MU) a terrific boost after his latest post on X, formerly Twitter.

While replying to a post by an analyst at Citrini Research, which provides thematic equity investing and macro trading insights, Musk pointed out that the dynamic random-access memory (DRAM) needed in humanoid robots "will exceed everything else on Earth." Micron stock surged more than 5% following Musk's remark.

In this article, we will check if humanoids can indeed become the next major growth driver for the memory industry and Micron Technology.

Image source: Getty Images.

Robots can become the next big catalyst for the memory industry

According to Counterpoint Research, DRAM demand from humanoids could increase by almost 21x between 2026 and 2030. The research firm notes that the DRAM content in each humanoid could jump from the current 19GB to 39GB by the end of the decade.

However, Musk believes that humanoids will need much larger DRAM. Tesla, for instance, uses 72GB of memory on its AI5 chip that powers the Optimus robot, while the AI6 chip is equipped with 144GB of memory. It is worth noting that Musk had to slash the AI5's memory capacity in half, while the AI6 chip saw a one-third drop in memory capacity. Tesla had to make this move to procure enough memory volumes and reduce production costs amid the ongoing memory shortage.

What's worth noting is that Tesla has begun production of Optimus and intends to start shipping to customers next year. Musk predicts that Tesla can produce a million units of its humanoids every year at the Fremont factory. Moreover, demand for autonomous robots is increasing in factories.

Toyota, for instance, aims to automate its factories by deploying 400,000 robots. Meanwhile, Goldman Sachs recently increased its humanoid sales forecast for 2035 by a whopping 5x. The investment bank estimates that shipments of humanoid robots could reach 6.5 million units in 2035, generating $138 billion in revenue.

As such, there is a strong likelihood that humanoids will sustain robust demand for memory chips over the long run, adding to existing catalysts such as data centers, smartphones, vehicles, and personal computers.

Investors may be making a mistake by not buying Micron stock

Micron stock has been in hot water lately. Concerns about the sustainability of heavy spending on artificial intelligence (AI) infrastructure have weighed on semiconductor stocks, but emerging niches such as humanoids and physical AI suggest that the memory market is poised to continue growing at a terrific pace over the long run.

Micron CEO Sanjay Mehrotra noted on the recent earnings call that "physical AI can become a significant driver of memory and storage demand by the end of this decade," driven by increases in memory content and units. Importantly, Mehrotra notes that "several physical AI customers are sampling our next-generation products," and the size of the physical AI-focused memory market could increase substantially over the long run. According to Mehrotra:

Memory content in Level 4 and higher autonomous vehicles typically exceeds 200GB, while storage content reaches multiple terabytes, each more than an order of magnitude greater than in today's Level 2+ and Level 3 semi-autonomous vehicles. Humanoid robots are expected to have comparable memory and storage requirements to autonomous vehicles.

So, as AI moves beyond data centers into real-world applications, Micron's addressable market will grow substantially. This explains why buying this stock is a no-brainer right now. Micron trades at just 13 times earnings, while the forward earnings multiple of 5 is even more attractive. These multiples are extremely cheap for a company that's expected to clock a 133% increase in earnings per share in the current fiscal year.

Given that Micron already has solid catalysts driving phenomenal growth in revenue and earnings and is poised to win big from new opportunities such as physical AI, buying this AI stock at its current valuation will be a smart long-term move. And finally, Musk's latest statement on the state of the memory market could give Micron stock a much-needed boost after recent weakness.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group, Micron Technology, and Tesla. The Motley Fool has a disclosure policy.