Generative artificial intelligence (AI) software such as OpenAI's ChatGPT that was introduced to the market in late 2022 is advancing remarkably fast. But while it's been around for just a few years, such innovations in generative AI are already bumping into some serious limitations, such as power and memory.
While the power problem -- getting enough computing capacity and data centers to run generative AI software -- gets a lot of attention, the memory issue may actually be easier to solve. It amounts to producing more memory hardware like random access memory (RAM) and dynamic random access memory (DRAM).
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And there is one company I foresee becoming a leader in that particular niche of the broader AI industry: Micron Technology (MU +2.75%).
Idaho: Famous for more than potatoes these days
Based in Boise, Idaho, Micron has emerged as an early leader in the AI memory space. In the past 12 months, it has seen its shares rocket up 277%. And given a huge secular tailwind in the form of the AI-driven memory shortage, I see Micron's growth accelerating.
CNBC reports that this year, there won't be enough RAM to meet global demand. As a result, according to TrendForce analyst Tom Hsu, prices for memory components are expected to rise by 50% in the first quarter of 2026 alone.
NASDAQ: MU
Key Data Points
Nvidia gets all the hype because its chips handle the processing; essentially, they run AI programs. But for that program to learn and draw inferences from the data it takes in, it needs memory components like Micron's RAM and DRAM chips.
So essential and lucrative is the AI memory market that, late last year, Micron announced it would exit the consumer memory market entirely to focus on AI memory and meet that astronomical, growing demand.
And I don't see that hurting Micron's bottom line in the slightest, as most of its revenue growth recently has come from its cloud and data center segments. Micron's overall revenue for Q1 of its fiscal 2026 (ended Nov. 27, 2025) was $13.6 billion, a 57% increase year over year.
DRAM sales alone accounted for 79% of quarterly revenue and were up 69% year over year, driven by AI gobbling up all the memory hardware it could.
Micron is turning a healthy profit on those chips, too. At present, it has a gross profit margin of 45.3% and a net income margin of 28.15%. The company consistently beats earnings and has done so in each of the past five quarters.
Despite all that, the company trades at a forward generally accepted accounting principles (GAAP) price-to-earnings ratio of 11.6, which is nearly three times lower than the sector median of 31.1. That tells me the company has plenty of runway left before its growth trajectory stalls out.
All things considered, Micron has an impressively low P/E, and it's only a matter of time before the tailwind of the memory shortage driving its sales will get Wall Street's attention.
Micron is already a leader in the memory space, but with growth like this it has the potential to become the leader.
