Micron's $25 Billion Expansion: Chasing a Structural Memory Deficit That Could Last Until 2028
01.06.2026 - 08:44:16 | boerse-global.deThe memory market has flipped from a cyclical commodity to a structural bottleneck, and Micron Technology is betting bigger than ever that the imbalance will persist. The chipmaker can currently fill only 50 to 66 percent of incoming orders, a shortfall that has prompted it to raise its capital expenditure budget for fiscal 2026 to more than $25 billion — an increase of $5 billion from its prior plan and more than $10 billion above last year's outlay. The message from management is clear: supply will not catch up with AI-driven demand until at least 2027, with a full ramp of new capacity likely only in 2028.
That aggressive spending is being poured into factories across three continents. In Singapore, Micron is building a two-story wafer fab dedicated exclusively to advanced NAND production for AI data centers. In Manassas, Virginia, the company has begun series production of its 1-alpha DRAM node, which will quadruple the site's DDR4 capacity, primarily for automotive and industrial customers. Meanwhile, Malaysia is expanding its assembly and test operations. The expansion is expected to create roughly 3,000 new jobs in packaging, fab engineering, and manufacturing automation.
The urgency is underscored by Micron's deepening ties to the AI ecosystem. The company was named a "strategic infrastructure partner" by Anthropic as part of the AI startup's $65 billion fundraising round. At the same time, Micron has started volume production of HBM4 modules designed specifically for Nvidia's "Vera Rubin" platform. These high-bandwidth memory chips are now effectively sold out through the end of 2026 under long-term fixed-price contracts, insulating Micron from the volatility of the spot market.
Should investors sell immediately? Or is it worth buying Micron?
The pricing power that comes with such scarcity is dramatic. According to TrendForce and analyst estimates from May 2026, DRAM contract prices are rising 50 to 60 percent quarter-over-quarter in the second quarter. For NAND flash, the jump is even steeper at 75 to 100 percent. UBS analyst Timothy Arcuri, who lifted his price target on Micron from $535 to $1,625 while maintaining a "Buy" rating, expects the company to generate free cash flow of over $400 billion between 2027 and 2029. He forecasts earnings per share of $155 for 2027 and $167 for 2028, a figure that leaves Micron trading at roughly 7 to 10 times those forward earnings — a steep discount to Nvidia and Broadcom, which change hands at about 24 times their own forward profits.
The stock market has already taken notice. Micron briefly topped a $1 trillion market capitalization in late May 2026, and the shares currently sit at €833, exactly matching their 52-week high. The year-to-date gain stands at roughly 210 percent. The rally is backed by record financial results: in the second fiscal quarter, revenue surged 196 percent to $23.9 billion. For the third quarter, management has guided around $33.5 billion, while the analyst consensus sits slightly higher at $33.8 billion — a 263 percent jump from the same period a year earlier. All eyes will be on the formal earnings release on June 24.
A handful of investors have begun to question whether the $25 billion capex spree risks creating an oversupply later in the decade. For now, however, that debate remains academic. Hyperscalers can secure only about 60 percent of the memory they need, and the appetite for high-performance storage is widely regarded as price-inelastic. As long as the training and inference demands of generative AI continue to outpace the pace of factory construction, Micron's bottleneck looks set to stay.
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