Micron Earnings Spark Memory Supercycle Consensus: Wall Street Forecasts Boom Extending to 2030, Industry Landscape Shifts

Bank of America semiconductor analyst Vivek Arya emphasized that "without memory, there is no AI," and that the industry's current earnings surge reflects a permanent structural shift rather than a traditional cyclical upturn. He pointed out that manufacturing AI-optimized memory chips requires three to four times the production capacity of traditional computing products, and the supply-demand imbalance will persist until at least the end of 2027.

Supply-side structural constraints have become the core support for the supercycle, as building new fabs faces multiple hurdles including high costs, regulatory approvals, and power and water supply issues, meaning that even by 2028, effective capacity expansion will remain limited.

Upgrading legacy fabs consumes substantial cleanroom resources, and yield ramp-ups for advanced nodes remain slow. This, combined with the high conversion ratio of HBM relative to traditional DRAM, further constrains overall available capacity.

On the demand side, accelerating AI infrastructure buildouts are driving robust demand for high-end products such as HBM4, SOCAMM, and GDDR7. Although bit shipment growth in the second half of 2026 and 2027 is higher than expected, it will still remain below 20%.

Micron has reached long-term agreements (LTAs) with 16 customers, securing pricing, volume, and supply visibility. This model is reshaping the industry's pricing mechanism, aligning with the logic of the Taiwanese foundry industry, and is expected to reduce cyclical volatility and sustain high profitability over the long term.

However, as the share of LTAs increases, the room for significant average selling price (ASP) increases will be compressed, and ASP trends are expected to moderate by the third quarter of 2026.

Micron's guidance indicates that quarterly revenue for the period ending late August 2025 is approximately $50 billion, translating to annualized revenue of about $200 billion. Extrapolating from Micron's market share of approximately 20%, the global memory chip market size is poised to reach $1 trillion, corroborating Bank of America's industry model that projects quarterly sales of $257 billion (annualized at over $1 trillion) for the third quarter of 2026.

Notably, despite Micron's capital expenditures in this cycle more than doubling compared to a normal cycle, its free cash flow still registered significant growth. This underscores the improvement in earnings quality driven by the structural upgrade to high-end products, providing financial support for the industry's long-term upcycle.

Despite the sharp rise in semiconductor stock prices, valuations remain low. Arya pointed out that Micron's forward P/E ratio has remained basically unchanged this year and is currently below 10x, which, like giants Nvidia and Broadcom, is lower than the S&P 500 P/E ratio. He predicts that the deployment of AI infrastructure will continue until 2030, and although growth may not sustain a high annual rate of 60%-70%, structural expansion will persist.

However, Arya also cautioned that industry development ultimately depends on downstream innovation and commercialization. "The only factor holding it back is whether end-users have enough imagination to develop new applications and monetize them." This means that the long-term growth of the memory industry relies not only on technological progress, but also on the continuous expansion and implementation of AI application scenarios.

Currently, major Asian memory manufacturers, including Samsung and SK Hynix, all share Micron's optimistic outlook on the industry, further bolstering market confidence in the sustainability of this cycle.

This content was translated using AI and reviewed for clarity. It is for informational purposes only.