Micron Just Gave Incredible News to Investors of This AI Infrastructure Stock That Has Tripled in a Year
Key Points
Micron again increased its capex guidance in its latest earnings report.
The company says it plans to buy more equipment to fill the supply gap.
Micron's investments should help another tech company deliver more upside after its red-hot run in the past year.
Micron Technology (NASDAQ: MU) delivered blowout results for the second quarter of fiscal 2026 (which ended on Feb. 26, 2026) on March 18. This wasn't surprising, as the company benefits from the artificial intelligence (AI)-fueled demand for its memory products.
Micron's revenue almost tripled year over year to $23.9 billion, while its non-GAAP operating margin jumped from 25% to 69%. This sharp spike in the company's margins is the result of the persistent increase in memory prices, caused by supply constraints and booming demand. Not surprisingly, Micron is scrambling to produce more chips to meet customer demand, and that's good news for Lam Research (NASDAQ: LRCX).
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Let's see why Micron's strong growth is likely to rub off positively on Lam stock.
Image source: Micron Technology.
Micron plans to significantly boost its capex
Micron management says that it can fulfill only 50% to two-thirds of the memory demand from its key customers. This explains why Micron now expects its fiscal 2026 capex to exceed $25 billion, well above its December 2025 estimate of $20 billion. For comparison, Micron's capex stood at $13.8 billion in the previous fiscal year.
What's more, the AI-fueled demand for high-bandwidth memory (HBM) that's used in AI data center chips suggests that Micron's heavy spending is poised to continue next year as well. CEO Sanjay Mehrotra said on the latest earnings call that he expects the company's "fiscal 2027 CapEx to step up meaningfully to support HBM and DRAM-related investments."
Mehrotra added that Micron will boost its investments in cleanroom facilities, which are used to manufacture chips in a controlled environment, and will procure more equipment to manufacture memory chips. All this bodes well for Lam Research, a semiconductor equipment manufacturer that gets a significant share of its revenue from memory equipment sales.
Lam Research stock got a nice boost after Micron's results
Lam stock has been heading higher following Micron's latest report, as I had predicted. It is worth noting that the stock price tripled in the past year. Importantly, Lam is built for more upside, as higher capital spending by the likes of Micron will give its business a nice shot in the arm.
After all, Lam got 34% of its revenue from selling memory chipmaking equipment in the previous quarter. The strong investments in memory and semiconductor manufacturing equipment led to impressive increases in its revenue and earnings in the past couple of years.
Data by YCharts.
Analysts expect Lam's earnings to jump by 28% in the current fiscal year to $5.31 per share, followed by a stronger jump of 30% in the next one. However, don't be surprised to see Lam's bottom line growing at a faster pace, driven by the massive investments in memory infrastructure, which could pave the way for more upside in this AI stock.
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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Lam Research and Micron Technology. The Motley Fool has a disclosure policy.
