Over the long haul, stock market investing is a wealth-generating machine. And few companies exemplify this better than Micron Technology (NASDAQ: MU). If you bought $10,000 worth of the memory giant 10 years ago and held through the volatility, you would have roughly $550,790 today -- a life-changing return of over $5,410%.
Most of the gains would have accrued over the last 12 months as generative artificial intelligence (AI) drove demand for its high-bandwidth memory hardware to skyrocket. That said, markets are fickle. And this boom is not guaranteed to last forever.
Let's look at Micron's history to get some clues about what the next 10 years might hold for the company. This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia.
For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » Consumer-facing AI large language models (LLMs) like OpenAI's ChatGPT, Anthropic's Claude, and xAI's Grok rely on massive data centers for training and inference (the process of sifting through learned data to answer queries). And while these facilities are powered by a variety of computer hardware, high-bandwidth memory (HBM) has emerged as one of the biggest bottlenecks because global production has struggled to keep up with demand.
Micron is one of only three companies capable of manufacturing HBM at the commercial scale required for AI data centers. And demand is so high that it is lifting prices across all its business segments, as manufacturing capacity that would otherwise have gone to other types of memory products is being redirected to HBM, leading to shortages. Micron's third-quarter revenue surged 346% year over year to $41.5 billion, driven mostly by its core data center and cloud memory units, which serve generative AI-related workloads.
But unrelated segments like mobile and automotive also soared because the AI boom has tightened supply in the entire memory market, pushing up prices across the board. The company's gross margin now stands at an eye-popping 84.6%, which is a level typically only seen in software companies that don't sell physical products. And earnings per share more than doubled to $24.67.
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