Micron Technology MU received another vote of confidence from the auto industry after signing a long-term agreement with Ford F to supply memory and storage solutions for the automaker’s next-generation vehicles. The deal comes just days after Micron announced a similar supply agreement with General Motors GM, highlighting the chipmaker’s growing role in powering increasingly software-defined vehicles.
The back-to-back agreements reflect a broader industry trend. Modern vehicles rely on advanced driver-assistance systems, connected features and sophisticated infotainment platforms. All these require greater amounts of memory and storage. At the same time, booming artificial intelligence (AI) investments have boosted demand for DRAM (Dynamic Random-Access Memory) used in data centers, pushing its prices higher.
For Micron, these automotive wins with Ford and General Motors complement an already strong AI-driven growth story. The company is expanding advanced DRAM production in Virginia to support long-term demand from automotive customers, while its leadership in high-bandwidth memory (HBM) for AI servers continues to benefit from surging AI infrastructure spending.
After the stock’s remarkable rally over the past year, the key question for investors is whether these tailwinds still leave room for further upside.
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AI Boom and Tight Memory Supply Support Micron’s Growth
Micron continues to benefit from robust demand for memory chips across multiple end markets, including AI data centers, automotive, industrial and consumer applications. The company expects supply-demand conditions for both DRAM and NAND to remain tight beyond calendar 2027, creating a favorable pricing environment for memory manufacturers.
The strength of this backdrop was evident in Micron’s third-quarter fiscal 2026 results, with both revenues and earnings comfortably surpassing analysts’ expectations.
Micron Technology, Inc. Price, Consensus and EPS Surprise
Micron Technology, Inc. price-consensus-eps-surprise-chart | Micron Technology, Inc. Quote
DRAM remained the primary growth engine, contributing 76% of total revenues. Sales from the segment jumped 67% sequentially, supported by higher selling prices and steady shipment growth.
Demand for Micron’s HBM, a critical component in AI servers, continues to accelerate as cloud providers and chipmakers expand AI infrastructure. The company has already generated more than $1 billion in HBM4 revenues, while the volume ramp of its HBM4 12-high products is progressing twice as fast as the previous HBM3E generation. Reflecting this momentum, Micron now expects the HBM market to exceed $100 billion by calendar 2027, earlier than previously projected.
Capacity Expansion Strengthens MU’s Long-Term Outlook
Micron is also investing to support future demand. Earlier this year, the company completed the acquisition of Powerchip Semiconductor Manufacturing Corporation’s facility in Taiwan, expanding its manufacturing footprint. It now expects meaningful production from the Tongluo fab to begin by mid-2027, ahead of earlier expectations, while construction of a second cleanroom is underway to support future EUV-based manufacturing. Meanwhile, its Idaho DRAM facility remains on track.
Micron is also strengthening customer relationships through long-term supply agreements, having signed 16 multi-year take-or-pay contracts (as highlighted during the fiscal third-quarter 2026 earnings call) with binding volume commitments. Combined with its growing presence in AI, automotive and enterprise storage—including an expanding SSD business—these investments provide Micron with stronger revenue visibility and position it well to capitalize on rising memory demand over the coming years.
The Zacks Consensus Estimate for MU’s fiscal 2026 and 2027 sales implies year-over-year growth of 234% and 88%, respectively. The same for fiscal 2026 and 2027 EPS calls for an uptick of 790% and 107%, respectively.
See how the consensus mark for Micron’s EPS has been revised in the past 60 days.
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MU’s Valuation Check
Despite such a strong rally over the past year, Micron’s valuation remains much more reasonable relative to the broader sector. The stock continues to be supported by improving profitability, rising earnings estimates and sustained demand for memory chips across AI, automotive and other end markets.
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Unlike many high-growth AI stocks that trade at stretched valuations, Micron is benefiting from both strong AI-driven demand and favorable memory pricing. As long as the company continues to execute on its HBM roadmap, expand capacity and capitalize on tight DRAM and NAND supply conditions, its current valuation still appears attractive for long-term investors.
MU Still a Screaming Buy at Current Levels
The biggest mistake investors can make is assuming Micron’s rally has already priced in its future. The company’s business mix is becoming structurally stronger, supported by AI, long-term supply agreements and expanding end-market opportunities. It is a cash-rich company with a strong balance sheet. With earnings expected to grow rapidly and memory demand remaining favorable, Micron appears well-positioned for more upside and certainly deserves a place in long-term growth portfolios.
Micron sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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