At the turn of the century, investors might have found the idea of a company reaching a $1 trillion market cap as fairly outlandish.
Today, there are over a dozen companies that make the claim, with the artificial intelligence (AI) chip giant Nvidia now trading at a market cap of over $5 trillion. Unless valuations pull back sharply due to AI hitting a major roadblock, more companies are poised to surpass trillion-dollar market caps.
In fact, one just did. Meet this pick-and-shovel AI stock that just joined Meta Platforms, Tesla, and Broadcom in the $1 trillion club.
Image source: Getty Images.
Understanding Micron's role in AI
What an incredible run the computer memory company Micron Technology (MU +0.90%) has been on. The stock is up over 227% this year and over 867% in the past year (as of May 28).
The big reason Micron and a few other related stocks have surged is due to tremendous demand for memory, which has become a big part of the AI story. Chipmakers like Nvidia need memory to sit directly on their graphics processing units (GPUs), which are key for training large language models. Memory is needed to feed the GPUs with data.
As Nvidia and other chipmakers have built more advanced GPUs and scaled GPU clusters, they need more memory to process data faster. There are different types of memory, but Micron makes a type called dynamic random-access memory (DRAM), which was commonly used in older technologies like computers and cellphones.
More recently, however, Micron has been developing a more complex memory product called high-bandwidth memory (HBM), which essentially stacks multiple DRAM chips. This is better for GPUs because it reduces the distance data has to travel to reach them.
In March, Micron announced that it had designed a new HBM model called the HBM4 with 36 gigabytes of 12-Gi memory, specifically made for Nvidia's Vera Rubin GPU platform.
According to the market research firm Counterpoint, Micron held 23% of the global DRAM market share by revenue at the end of 2025, behind only Samsung (36%) and SK Hynix (32%). In the global HBM market, Micron had 21% market share at the end of last year, still behind SK Hynix (57%) and Samsung (22%).
However, Micron's share had more than doubled from just 9% at the end of 2024.
Demand is through the roof right now
On Micron's second-quarter earnings call for its fiscal year 2026 in March, CEO Sanjay Mehrotra told Wall Street analysts in prepared remarks that data center demand for DRAM and NAND flash memory, which Micron also makes, is expected to hit 50% of the industry's total addressable market for the first time ever this year.
Furthermore, Mehrotra said that both DRAM and NAND demand this year is expected to be constrained by supply. DRAM shipments this year are projected to grow in the low-20s percentile, slightly above Micron's previous outlook.
NASDAQ: MU
Key Data Points
UBS analyst Timothy Arcuri recently shocked the market by more than tripling his price target on Micron from $535 per share to $1,625, the highest on Wall Street. The stock currently trades around $900.
In a research note, Acuri said he and his team expect DRAM supply to remain constrained until at least halfway through 2028, and NAND supply to remain constrained until the end of 2027.
"We believe the market will start to put a more 'normal' multiple on the stock and [Micron] will continue to rerate higher as more details emerge about the structural changes AI has driven to the entire memory complex," Arcuri said.
How investors should play the stock
Micron currently trades at close to 42.5 times trailing earnings, above its 10-year average of roughly 22 times.
However, AI wasn't in the picture a decade ago, like it is now, and Micron and other memory suppliers had likely never experienced this kind of demand. It's a new day for this sub-sector, so the stock should trade at a multiple above its 10-year average.
That said, Micron trades at close to double its normal multiple and is tied to the AI trade, making it vulnerable if AI-related capital expenditures slow.
That's why I wouldn't necessarily make Micron a large position. I think investors can own it, but it's probably a good idea at this point to start with a smaller position and slowly build it through dollar-cost averaging.
