Micron Shatters Forecasts as AI Demand Overwhelms Supply

Micron Technology has delivered a financial outlook so powerful it has left even the most bullish market observers stunned. The memory chip giant didn't just exceed quarterly expectations; it issued guidance that completely obliterates consensus estimates. As the company's shares surged to a record high on Friday, the message is clear: the AI-driven boom for memory chips is entering a phase of dramatic acceleration, with supply struggling to keep pace.

The core driver of this explosive forecast is the insatiable demand for AI infrastructure colliding with constrained production. Sumit Sadana, Micron's Chief Business Officer, characterized the current situation starkly, stating the company is currently "more than sold out." Presently, Micron can only fulfill approximately 50 to 60 percent of the demand from its largest customers.

The company's entire 2026 production of critical High Bandwidth Memory (HBM) is already fully allocated through supply agreements, which includes the next-generation HBM4 product. CEO Sanjay Mehrotra emphasized that memory chips have transformed from a simple commodity into a strategic component, essential for the operation of modern AI data centers.

A Landmark Guidance Revision

The true headline from the latest financial report lies not in past results, but in the forward-looking projection. For its second fiscal quarter of 2026, the company forecasts revenue of approximately $18.7 billion. This figure stands an incredible $4 billion above Wall Street's expectations.

Should investors sell immediately? Or is it worth buying Micron?

Analysts at Morgan Stanley classified this discrepancy as the largest positive revenue surprise in the history of the U.S. semiconductor industry—excluding Nvidia. Profit margins are also benefiting, projected to reach a record 68 percent. This is a direct result of rising memory prices and a favorable product mix heavily driven by AI applications.

Surging Price Targets and Market Reaction

The analyst community responded swiftly, with a wave of upgraded price targets to reflect the new reality:
* Rosenblatt Securities raised its target from $300 to $500.
* Morgan Stanley now sees the stock reaching $350, naming Micron its top pick in the U.S. chip sector.
* Bank of America upgraded the stock directly to a "Buy" rating.

This optimism was immediately mirrored in the market: Micron's shares closed Friday up 7.10 percent at €227.05, marking the highest level in the company's history.

Ramping Investments to Address Shortages

To even begin addressing the enormous demand, Micron is significantly increasing its capital expenditures. The spending forecast for fiscal 2026 has been raised from $18 billion to $20 billion. The focus is squarely on expanding manufacturing capacity in the second half of the year to alleviate the structural shortage in the AI era. The high-performance memory (HBM) market is now expected to reach a size of $100 billion by 2028—a milestone likely to be hit two years earlier than previously anticipated.