To The Moon

Market Drivers Behind the Recent Rally

1. Tight supply and AI demand are foundational.

Micron’s share price has surged significantly, with its market capitalisation topping US$400 billion as investors price in limited memory supply and robust AI infrastructure demand. Micron and its peers have sold out high-bandwidth memory (HBM) capacity through 2026, indicating very strong order books relative to available production capacity. This tightness underpins pricing power. 

2. AI memory workloads are structural.

Cloud and AI data centre demand for DRAM, NAND and especially HBM has transformed end market dynamics, with memory chips becoming critical infrastructure components rather than commodity items. Global memory shortages driven by AI workloads have been documented as a structural shift in supply allocation, moving capacity away from legacy products. 

3. Analysts see continued pricing strength.

Several analysts have raised price targets and reiterated that memory pricing power could persist through at least end-2026 due to constraints in supply vs demand for memory chips. This is one reason investors remain bullish. 

4. Industry capacity expansions remain long-lead.

Even though Micron and competitors are investing in new fabs (for example in the US) to expand memory output, meaningful new capacity typically takes several years to come online. This supports the idea that current tightness and pricing power are not easily or quickly relieved. 

Can Storage Pricing Momentum Carry the Stock Higher in 2026?

Yes, there are plausible near-to-medium-term tailwinds, but they are not unlimited.

Bullish Factors

Pricing power translating into margins. Sustainable memory pricing boosts gross margins and earnings visibility, contributing to stronger valuations. Recent forecasts suggest robust revenue growth for 2026. 

AI memory demand remains structural. With AI workloads continuing to grow rapidly, DRAM and HBM demand is expected to remain elevated, supporting pricing momentum and capacity utilisation. 

Investor sentiment reflects scarcity. Continued “sold-out” supply signals for 2026 orders reinforce investor confidence and could push valuations higher if earnings guidance continues to beat expectations. 

Risks / Limitations

Valuation and competitive dynamics. With MU trading at highs, the margin for error is reduced. Any earnings guidance below expectations or competitive pressures from peers like Samsung and SK Hynix could temper the rally. 

Capacity expansion dynamics. Although new capacity takes time, announcements and progress could dampen investor enthusiasm if markets start pricing in future supply growth. 

Broader semiconductor cyclical risk. Memory markets have historically been highly cyclical. Even if pricing power persists into 2026, a sudden shift in broader tech capex or macro conditions could lead to rapid price adjustments.

If Memory Prices Surge “Uncontrollably”, Will Demand Destruction Eventually Cap Upside?

Potentially, yes. In economics, demand destruction occurs when price increases materially suppress consumption. A few points to consider:

1. Memory is an input for multiple sectors.

Memory chips, especially DRAM and NAND, are inputs to PCs, servers, mobile devices and automotive systems. If prices escalate sharply across these categories, OEMs may cut orders, delay upgrades or redesign products to require less memory. Historical examples include past memory cycles where high prices led to inventory destocking. 

2. AI data centre demand may be more price-inelastic but is not infinite.

Hyperscalers might tolerate higher memory prices to support AI workloads, but only up to a point. There are engineering and economic trade-offs (for example system architecture or alternative memory types) that could emerge if costs become too elevated.

3. New capacity and innovation may relieve pricing pressure.

If industry capacity expansion, yield improvements, or even new memory technologies scale faster than expected, this could place downward pressure on prices. That in turn would limit any further valuation expansion for Mond memory assets.

4. Time horizon matters.

In the short-to-medium term (2026), pricing momentum could continue. Over a longer horizon (beyond 2026), demand elasticity and supply growth could temper prices, reducing the incremental benefit to valuation.

Summary

Storage pricing momentum can support Micron’s stock performance through 2026 provided tight supply and AI-driven demand persist. Pricing power feeding into earnings growth and capacity scarcity is a compelling near-term narrative. However, if memory prices accelerate “uncontrollably”, there is a real risk of demand destruction or substitution effects that could cap further upside. Structural constraints in capacity suggest pricing strength is likely beyond a typical cyclic upswing, but market participants should remain attentive to macroeconomic signals, competitive supply developments and changes in memory consumption patterns.