Micron’s AI Memory Deficit: Filling Only Half the Orders as a Multi-Year Scarcity Sets In

Micron CEO Sanjay Mehrotra reveals the company can only meet 50-67% of HBM and DRAM demand, with new fabs delayed until 2028, fueling a record revenue surge and 710% stock rally.

The semiconductor industry’s cyclical rhythms have given way to something far more persistent. Micron Technology finds itself in a bind that looks less like a typical upturn and more like a structural undersupply that could stretch well past 2026. At a J.P. Morgan conference in Boston, CEO Sanjay Mehrotra laid out the scale of the disconnect: the company can currently satisfy only 50 to 67 percent of customer demand for high-bandwidth memory and DRAM. That gap is not expected to close any time soon, as new fabrication capacity in Idaho and New York will not come online before 2028 at the earliest.

Markets have already repriced the stock accordingly. Shares of Micron gained 4.11 percent on Monday, ending the session at €674.60 after trading at €673.60 during the day. Over the past twelve months the rally has been staggering — a 710.72 percent surge that has lifted the market capitalisation to roughly $850 billion. A move into the trillion-dollar club would require less than an 18 percent further advance, by some calculations. Despite the explosive price action, the forward price-to-earnings ratio sits at only about 8 times the consensus estimate of $58.94 per share for fiscal 2026.

The financial results underscore just how profitable the scarcity has become. In the second fiscal quarter of 2026, Micron posted revenue of $23.86 billion — a 196 percent jump from a year earlier and a fourth consecutive record. Adjusted earnings per share of $12.20 easily beat expectations, while gross margin swelled to 74.9 percent. Operating cash flow reached $11.9 billion. The cloud-memory division alone contributed $7.7 billion at a 74 percent margin, representing nearly one-third of total corporate sales. Looking ahead to the third quarter, management guided for revenue of roughly $33.5 billion and a gross margin of around 81 percent.

At the heart of this pricing power is high-bandwidth memory, the specialised chips that feed AI accelerators and data-centre GPUs. HBM consumes nearly three times the wafer capacity of standard DDR5 memory, and Micron’s entire HBM output for the rest of the fiscal year is already locked in under fixed-price contracts. The company is racing to the next generation: the ramp of HBM4 is proceeding twice as fast as the HBM3 cycle, with improving yields. First samples of HBM4E, built on the 1-gamma process node with EUV lithography, are slated for a production ramp in 2027. Micron has secured a position as a key supplier for Nvidia’s Vera-Rubin platform and is already shipping 12-layer 36 GB modules in volume.

That technological speed does not, however, translate into an early market share lead. Counterpoint Research projects that by the end of 2026, Micron will hold an 18 percent share of the HBM4 market, trailing SK Hynix at 54 percent and Samsung at 28 percent. As the only US-based player in this oligopoly, Micron benefits from a geopolitical tailwind: hyperscalers such as Alphabet and Amazon have raised their capital expenditures to over $500 billion in 2026, and onshore supply is gaining strategic importance. The company has laid out a $200 billion investment programme to expand domestic fabrication, aiming to cover 40 percent of its global production from US sites by 2036.

Analyst targets reflect the tension between extreme near-term momentum and long-term execution risk. The consensus price target stands at $613.23, but several firms have set their sights much higher. DA Davidson has a $1,000 target, Melius Research goes to $1,100, HSBC also sees $1,100, and Deutsche Bank matches the $1,000 level. Citi is more conservative at $840. The ratings consensus remains a strong buy, underpinned by the view that Micron can sustain elevated margins as long as HBM supply remains tight. Some longer-term models project earnings power of up to $100 per share in fiscal 2027 if new factories ramp smoothly.

The heavy capital spending that enables those future profits is also the main risk. Building out the Idaho and New York complexes requires sustained investment, and any hiccup in construction or yield ramp could dent margins faster than bulls anticipate. The next hard test arrives on July 1, 2026, when Micron reports third-quarter results. By then, the market will be looking less at the AI narrative and more at how effectively fixed-price contracts, HBM utilisation, and capital costs translate into the bottom line. Until new capacity arrives in 2028, the supply deficit is Micron’s strongest ally — but also the clock that keeps ticking.