Why Micron (MU) Is a Must-Hold AI Stock for 2026

The artificial intelligence (AI) revolution is reshaping global technology infrastructure, and at its core lies an insatiable demand for high-performance memory. Micron Technology (MU) has emerged as a pivotal player in this transformation, leveraging its expertise in high-bandwidth memory (HBM) and advanced NAND to secure a dominant position in the AI-driven market. With surging demand for data center servers, AI accelerators, and next-generation computing, Micron's financial outperformance and strategic positioning make it a compelling long-term investment for 2026.

AI-Driven Memory Demand: A Tailwind for Micron

The AI boom has created a structural shift in memory demand, particularly for HBM, which is critical for training large language models and processing massive datasets. According to a Bloomberg report, the global HBM market is projected to grow at a compound annual growth rate (CAGR) of 21.35% from 2024 to 2033, reaching $16.72 billion by 2033. Micron, already a key supplier to AI hardware leaders, is capitalizing on this trend. In Q4 2025, the company generated nearly $2 billion in HBM revenue, with CEO Sanjay Mehrotra noting that demand for high-performance memory has grown "significantly".

Micron's HBM4 roadmap further solidifies its leadership. The company expects to sell out its entire 2026 HBM supply, projecting an annualized revenue run-rate of $8 billion by year-end. This is driven by a 3.5x increase in HBM content per GPU across generations, as AI models become more complex. With data center revenue surging 137% year-over-year in fiscal 2025 and accounting for 56% of total revenue, Micron is uniquely positioned to benefit from the AI infrastructure buildout.

Financial Outperformance: Record Revenues and Margins

Micron's financial results in 2025-2026 underscore its outperformance relative to peers. In Q1 FY 2026, the company reported revenue of $13.64 billion, far exceeding the $12.84 billion estimate, and forecasted Q2 revenue of $18.7 billion-well above Wall Street's $14.23 billion consensus. This momentum is fueled by pricing power in the memory sector, where supply constraints have allowed Micron to command premium margins.

Gross margins, a key metric for semiconductor firms, are set to reach an all-time high of 68% in Q2 2026. While SK Hynix, Micron's primary competitor, reported a gross margin of 55.3% in the same period according to AlphaSpread, Micron's management-adjusted gross margins are projected to hit 50.5%-52.5% in the next quarter. Analysts attribute this to Micron's ability to optimize production costs and secure favorable pricing agreements for HBM3E and NAND products according to Fool.com.

Operating profitability also highlights Micron's strength. In Q3 2025, the company's non-GAAP diluted earnings per share (EPS) surged 538% to $8.29, driven by a 49% revenue increase to $37.4 billion. While SK Hynix reported a 39% revenue growth and a $7.7 billion operating profit according to Fool.com, Micron's operating margin of 26.4% according to AlphaSpread is expected to climb to 46% in the coming quarters. This trajectory reflects Micron's disciplined cost management and focus on high-margin AI-related segments.

Competitive Edge: Market Share and Analyst Optimism

Despite SK Hynix's current 62% share of the HBM market according to StockTwits, Micron is rapidly closing the gap. The company's DRAM market share stood at 22.5% in September 2025 according to Fool.com, and its HBM share is expected to mirror this as demand for AI memory intensifies. With HBM's revenue share in the DRAM market projected to rise from 18% in 2024 to 50% by 2030, Micron's expansion into this high-growth segment positions it to capture significant market value.

Analyst sentiment further reinforces Micron's appeal. Wedbush and Stifel have raised price targets to $300, citing improved profitability and limited DRAM supply growth. Rosenblatt Securities and TD Cowen also project a $275-$300 price range, reflecting confidence in Micron's ability to sustain momentum through 2026. In contrast, SK Hynix, while also favored by analysts, faces a more competitive landscape in NAND and DRAM, where pricing pressures could temper margins.

Conclusion: A Strategic Bet on the AI Era

Micron's combination of technological leadership, financial resilience, and favorable industry dynamics makes it a must-hold for 2026. As AI-driven memory demand accelerates, the company's HBM and NAND offerings will remain indispensable to data center operators and AI hardware manufacturers. With record revenues, expanding margins, and a bullish analyst outlook, Micron is not just riding the AI wave-it is shaping it. For investors seeking exposure to the next phase of the AI revolution, Micron offers a compelling and well-supported opportunity.