AI Server Growth & Memory Demand: Why Dell and Micron Are Pivotal Plays in the AI Infrastructure Boom

Eli GrantMonday, May 19, 2025 7:57 am ET
18min read

The global AI revolution isn’t just about algorithms—it’s about infrastructure. As

and hyperscalers rush to build AI-ready data centers, two companies stand at the epicenter of this $400+ billion opportunity: Dell Technologies (DELL) and Micron Technology (MU). Their roles in enabling the “Intelligence Accelerated” era—where data is the lifeblood of AI—are now being validated by Mizuho Securities’ upgraded targets, signaling a structural shift in demand. Here’s why investors should consider these stocks as core holdings for the next decade.

The AI Infrastructure Imperative

The AI boom isn’t a fad; it’s a seismic shift in computing. By 2028, data center electricity demand is projected to grow 16% annually, driven by servers and storage systems capable of handling exabytes of data. Dell and Micron are uniquely positioned to profit from this transition. Dell’s $30 billion AI server pipeline—bolstered by its partnership with NVIDIA—ensures it will capture a growing share of the AI server market, which Mizuho forecasts to hit $406 billion by 2027. Meanwhile, Micron’s HBM3e memory, the backbone of NVIDIA’s H200 and future Blackwell GPUs, is a critical enabler of AI compute power.

Dell: The Systems Integrator of the AI Era

Dell’s stock price has surged 95% over the past year as investors recognized its leadership in AI infrastructure. Its PowerEdge XE7745 servers, optimized for NVIDIA GPUs, are already shipping with record backlogs, while its PowerStore storage systems are seeing 80% revenue growth (Q2 FY25). Mizuho’s $145 price target (up from $140) reflects Dell’s ability to leverage its $95.57 billion revenue base and $79.94 billion market cap to scale AI server production without sacrificing margins.

Key Catalysts for 2025:
- The Corporate/PC Refresh Cycle: Mizuho highlights a H2 2025 wave of Windows 11 upgrades and AI-enabled PC purchases, which could boost Dell’s Client Solutions Group.
- Tier 2 CSP Growth: Dell’s 38% revenue jump in Infrastructure Solutions Group (ISG) in Q2 FY25 underscores its dominance in non-hyperscale cloud markets, now accounting for 48% of AI server spending.
- New Product Momentum: The launch of the PowerEdge XE9680L server (supporting 72 NVIDIA Blackwell GPUs with liquid cooling) positions Dell to capitalize on next-gen AI workloads.

Micron: The Memory Leader in the AI Supply Chain

Micron’s fiscal Q4 2024 revenue soared 93% YoY to $7.75 billion, driven by record HBM3e sales to NVIDIA. Its HBM3e’s 30% lower power consumption and 50% efficiency gains over predecessors make it indispensable for data centers. Mizuho’s $135 price target (up from $115) reflects its view that Micron’s HBM market share (20–25% by 2025) will drive a sevenfold HBM3e market expansion to $35 billion by 2026.

Why Micron’s Margins Will Thrive:
- Cost Reduction: Micron’s advanced 12Hi HBM3e production and 3D stacking technology are cutting DRAM costs, even as NAND pricing stabilizes.
- Diversified Revenue Streams: 37.9% of sales now come from IT infrastructure (vs. 18.3% from storage media), reducing reliance on volatile consumer markets.
- NVIDIA’s Dependence: With NVIDIA’s Blackwell GPUs requiring Micron’s HBM3e, the supplier relationship is symbiotic—Micron’s margins rise as NVIDIA’s AI server sales do.

Synergistic Value: Dell + Micron = AI’s “Golden Pair”

The duo’s collaboration is a masterclass in supply chain synergy. Dell’s servers integrate Micron’s HBM3e, 6550 ION SSDs (the world’s fastest 60TB data center SSD), and LPDDR5X memory, creating a “full-stack” AI infrastructure solution. This partnership reduces latency, improves energy efficiency, and ensures Dell’s hardware stays ahead of competitors like HPE or Super Micro, which lack Micron’s memory leadership.

Valuation and Dividend Resilience

  • P/E Re-Rating: Dell’s current 17.5x P/E is undervalued relative to its 13.6x fiscal 2027 forecast. Micron’s high P/E (145.6x) reflects growth expectations, but its 2026 EPS estimates could justify further upside.
  • Dividend Strength: Dell’s 1.89% yield and 41.89% dividend growth in 2024 show financial flexibility, while Micron’s focus on HBM-driven margin expansion (39.5% in 2025) positions it for future shareholder returns.

Risks and Mitigants

  • Geopolitical Tensions: U.S.-China tech friction could disrupt supply chains, but Dell’s Vietnam manufacturing and Micron’s global partnerships reduce exposure.
  • Memory Pricing Volatility: Micron’s HBM3e dominance and Dell’s AI server backlog provide insulation against legacy DRAM/NAND price swings.

Conclusion: A Decade-Long Opportunity

The AI infrastructure boom isn’t a passing trend—it’s a structural shift. Dell’s server dominance and Micron’s memory leadership are being validated by Mizuho’s upgraded targets, which reflect their $145 and $135 price targets (implying 27.8% and 38.3% upside, respectively). With near-term catalysts like the H2 2025 refresh cycle and long-term tailwinds from data center modernization, now is the time to position in these stocks. Investors who overlook Dell and Micron risk missing one of the most compelling hardware plays of this decade.

The AI revolution isn’t just about training models—it’s about building the machines to run them. Dell and Micron are the architects of this future.