Micron technology (UM +1.87%) had a great year. It’s up about 230% so far in 2026, making it the fourth best-performing stock on the market. S&P500 This year. Normally you are supposed to buy a stock Before It’s been a run like that, but even after the run-up, I decided to open a position in Micron.
For what? It seems that some of Micron’s old trends are a thing of the past.
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Micron takes steps to reduce its cyclicality
Micron makes memory chips and the industry is known for being cyclical. There’s not much that separates one memory chip maker from another, so Micron has no pricing power. You can see this in action when you consider purchasing a replacement USB drive or upgrading your computer’s RAM. All the components are pretty much the same, but what really matters is the price you can buy them from.
The market goes through demand cycles that rise and fall, and when it rises, times are good for Micron and its peers. But in a recession, they find themselves with excess inventory and can’t sell any new production, causing businesses, and therefore inventory, to struggle.
Currently, we are experiencing the largest wave of memory demand ever seen, thanks to the intensity of the development of artificial intelligence. All available production capacity for both types of memory chips (DRAM and NAND, both made by Micron) is currently consumed. All memory chip companies said demand far exceeded capacity, causing prices to skyrocket.
UM Micron technology
$931.24+$17.11 (+1.87%)
NASDAQ · At 4 p.m. ET on 10/15/26
The fear is that this wave of demand will eventually fade, leaving Micron in a much worse state than it is now. However, Micron is taking steps to reduce the severity of a potential downturn. Micron has now signed several agreements with its customers that set floor and ceiling prices for memory chips, which will stabilize the market. Additionally, these are buy-or-pay agreements, so Micron has locked in about 35% of its revenue through 2030. This is a big step toward ending the cyclicality of Micron’s business, as Micron is now treated more like a true supplier rather than just a commodity trader.
Another development is that Micron is partnering with Nvidia to create a first custom memory chip for its GPUs. This will completely change Micron’s relationship with one of the largest memory buyers in the world, which is a good thing for Micron.
Overall, Micron has taken steps to stabilize its business and reduce its reliance on cyclical demand. But the question remains: when will the wave of demand for AI end?
AI development has just been expanded
Most investors see 2030 as the year AI development could slow down, but Micron just informed investors that a few of its customers have signed deals through 2031, indicating a longer time frame. Furthermore, conditions will get worse before they get better.
Conditions in the memory chip market were dire for buyers in 2026, with demand far outstripping supply. However, Micron’s management team noted that conditions will deteriorate further in 2027 and 2028 due to lack of supply. As Micron works to bring new production capacity online, it will take until mid-2027 and into 2028 for significant supply to become available. That means another few years of strong revenue growth, even after it grows in 2026.
All of this adds up to a stock that should perform like a normal big tech stock at least until the end of the decade. Although I am a long-term investor, the market is much more myopic, giving me ample time to invest in a company that is expected to continue to grow as AI development intensifies. I’m happy to own Micron stock and believe it will be very profitable over the next few years.
But I will also keep a close eye on memory chip market conditions, and if they deteriorate, I will exit the stock.
Gn bussni
