Apple (AAPL 1.93%) turned in a blockbuster quarter on Thursday, featuring record-breaking iPhone sales in the key holiday quarter.
The company topped estimates on the top and bottom lines in the quarter, as revenue jumped 16% to $143.8 billion with iPhone sales up 23% to $85.3 billion.
Profits also grew by a similar percentage, showing the company executing across the business.
When Apple grows, it impacts a number of companies downstream, those who supply chips for its smartphones and other devices, and one category got an unusual amount of attention on the earnings call. That was memory chips, which are undergoing a supply crunch due to soaring demand for AI applications, and that's sending prices skyrocketing.
In fact, the first question that Apple received on the earnings call was about inflation in memory. CEO Tim Cook said that memory constraints had little impact on first-quarter results, but he sees it becoming more of a headwind on second-quarter gross margin. He added, "Beyond Q2, we do continue to see market pricing for memory increasing significantly."
Image source: Getty Images.
Why that's great news for Micron
Micron (MU 3.21%) is one of the three large memory chip producers in the world, along with Samsung and SK Hynix, and it's the only one from the U.S.
Micron has become a key supplier for Apple as it prioritizes production in the U.S., noting that it sourced 20 billion chips from the U.S. in 2025.
The memory chip-maker has posted breakout results in recent quarters, and the stock has soared as prices ramp up in the memory sector, benefiting from increasing demand for high-bandwidth memory (HBM) chips used in data centers for AI applications. The sharp increase in iPhone sales should only exacerbate the shortage of memory chips, pushing prices up further.
Cook's statement above indicates that prices will move higher through the spring and summer, and Intel reported similar supply constraints from memory in its recent earnings report.
NASDAQ: MU
Key Data Points
Is Micron a buy?
The memory sector is notoriously cyclical, but the impact of AI could be rewriting the rules and seems to have created a supercycle for companies like Micron. Its earnings per share guidance for its fiscal second quarter was nearly double what analysts had projected, and the commentary from Apple shows that the analysts are still likely underestimating earnings growth.
Because of that cyclicality, Micron looks dirt cheap on a forward basis, trading at a price-to-earnings ratio of just 13 based on fiscal 2026 estimates, and analysts now expect revenue to double this year.
Micron management has called for AI tailwinds to continue through at least 2028, so the stock could still go a lot higher. As the supply demand dynamics get more favorable, Micron remains a strong buy.
