MW Micron's stock soars toward fresh highs as a 'virtuous cycle' for memory unfolds

By Britney Nguyen

As AI models get larger, more memory will be needed to improve them, therefore creating ongoing demand, one analyst says

Micron's stock was climbing on Monday morning.

The memory industry is undergoing a change in the age of artificial intelligence, and one analyst thinks investors are still not bullish enough on what that means for the future.

While investors have caught on to the dynamics driving shares of memory and storage makers such as Micron Technology $(MU)$, Western Digital $(WDC)$ and Sandisk $(SNDK)$ to new highs, including higher-value products and longer-term contracts, D.A. Davidson managing director Gil Luria said many of them "are still anchored to the view" of memory being a cyclical business and are therefore "underestimating the new math of memory in the AI age."

As AI models get larger, the need for memory is growing to support longer context windows, or the amount of data being processed at one time, Luria noted. That in turn is driving demand for efficiency mechanisms such as key-value cache that require even more memory.

"The longer context makes the models better, which will make bigger models possible and the virtuous cycle continues," Luria said.

Therefore, the historically cyclical sector "is structurally more important than it has ever been," in his view, since it is crucial to improving AI.

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Micron shares were climbing 4.7% toward a record high in recent morning trading Monday as investors caught wind of rising challenges for fellow memory-chip maker Samsung Electronics (KR:005930). The South Korean company is aiming to reach a deal with its labor union this week ahead of a planned strike later this month, the Korea Herald reported on Monday. Samsung employees are reportedly demanding a change to the company's bonus system.

Earlier Monday, Micron's stock was up as much as 9.6% at an intraday high of $818.67, which lifted the company's market capitalization to $923.2 billion - its first time above $900 billion. Micron first topped the $600 billion mark just six sessions ago, on May 1, and reached the $800 billion milestone on May 8. The stock would have to close at $798.06 to hit the $900 million closing milestone, according to Dow Jones Market Data.

At current prices, the market cap of $881.59 billion would make Micron the 12th most valuable U.S. company.

Read on: Micron is now worth more than JPMorgan as the stock sees its best week in two decades

Luria also sees memory potentially becoming "a better market" compared with the one for central processing units, which has boomed in recent months from agentic AI and the shift to inference, or the process of running AI models after training.

Unlike the CPU market, which is becoming "more crowded," the market for dynamic random-access memory is limited to Micron, Samsung and SK Hynix (KR:000660), Luria noted.

Additionally, memory companies still "remember the pain of [the] last cycle" when strong demand eventually fell, sending prices on a freefall, he said. This time, "they are demanding their value," and he sees memory makers positioned to continue raising prices amid supply shortages. He doesn't see the same dynamic for the CPU market, where growing competition means companies have less pricing power.

In Luria's view, investors will start to "rethink the previous punitive valuation framework" for Micron, which will lead to "substantial upside." Late last month, Luria initiated coverage of Micron's stock with a buy rating and a $1,000 price target, representing upside of 34% to its Friday closing price of $746.49.

Micron's stock has rocketed 173.9% in 2026, while the PHLX Semiconductor Index SOX has rallied 69% and the S&P 500 index SPX has advanced 8.3%.

-Britney Nguyen

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May 11, 2026 11:08 ET (15:08 GMT)

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