Shares of Micron Technology (NASDAQ:MU) recently shot up to 17-year highs as more evidence about stronger DRAM pricing emerged. Goldman Sachs analysts recently raised Micron's price target on grounds of tight DRAM supply that have pushed up average selling prices of memory chips.

Goldman estimates that prices of 32 GB server DRAM modules have increased from $300 in January to almost $315 now, setting the stage for Micron to report strong second-quarter results on March 22. Thus I won't be surprised if Micron beats consensus estimates and issues sunny guidance.

Artist's rendering of an integrated circuit.

Image source: Getty Images.

Solid growth in the cards

Wall Street expects Micron's second-quarter revenue to jump 56% year over year to $7.28 billion. What's more, its earnings are expected to more than triple to $2.74 per share. These estimates are right in line with the memory specialist's recently updated guidance.

Micron was originally expecting earnings of $2.58 per share on $7 billion in revenue, but consistently strong DRAM pricing and demand through the second quarter encouraged it to boost its estimates. Industry sources believe that DRAM prices will increase 3%-5% sequentially during the first calendar quarter of 2018, while demand will remain robust thanks to the growing DRAM content in smartphones and data centers.

However, investors will be more concerned with Micron's outlook to get a clear insight into the health of the memory market.

Micron should issue solid guidance

The dynamics of the DRAM market are expected to remain favorable, with prices expected to rise as much as 10% through the first half of 2018 on the back of strong end-market demand. For instance, the DRAM content in smartphones jumped 33.4% to an average of 3.2 GB last year, according to DRAMeXchange.

Smartphone original equipment manufacturers (OEMs) are expected to pack their devices with more memory this year. Samsung, for instance, has equipped its latest flagship smartphones with 4 GB and 6 GB RAM configurations. Meanwhile, Chinese smartphone company OnePlus' latest flagship phone comes in two variants, which pack 6 GB and 8 GB of RAM.

So, the mobile DRAM market should keep expanding this year. In addition, server DRAM will also witness strong demand as data centers will need more memory to store and process the data generated by artificial intelligence and Internet of Things-related applications. As such, it isn't surprising to see DRAMeXchange estimates that DRAM sales will rise 30% this year to $96 billion, which bodes well for Micron.

More importantly, Micron forecasts that demand for automotive and server-related DRAM will outpace the growth of the broader DRAM industry, which is expected to clock a compound annual growth rate (CAGR) of 20%-25% for the next few years.

However, these aren't the only catalysts for Micron. The company is going aggressively after the NAND flash market as well, as evident from its recently launched mobile 3D NAND solutions. The chipmaker is targeting flagship devices with this product line, which comes in 256 GB, 128 GB, and 64 GB capacities.

Micron believes that built-in storage in smartphones will grow rapidly thanks to emerging tech trends such as artificial intelligence. Counterpoint Research estimates that average NAND flash storage capacity in smartphones will increase to 60 GB by the end of the year. Looking ahead, Micron forecasts that flagship smartphones could have as much as a terabyte of storage capacity by 2021 as they will store and process more data on the device itself.

In the end, it looks like Micron's growth isn't going to stop anytime soon. I expect another beat-and-raise announcement from Micron when its second-quarter results come out next week.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.