Micron Technology, Inc. (NASDAQ: MU) stock jumped sharply on Thursday, Dec. 18, after the memory-chip maker delivered a blockbuster quarter and issued a far-stronger-than-expected outlook—reigniting the “AI infrastructure” trade across semiconductors and putting Micron’s high-bandwidth memory (HBM) strategy at center stage.
As of 16:39 UTC, MU was trading at $252.34, up $26.82 (+11.89%) on the day, after swinging between $245.80 and $263.34 intraday. Meanwhile, Reuters reported Micron shares were up nearly 16% during Thursday’s session as investors digested the company’s forecast and the broader message: memory supply remains tight, pricing is rising, and AI data centers are consuming capacity faster than manufacturers can add it. [1]
What happened to Micron stock on Dec. 18: the earnings-and-guidance shockwave
The rally traces back to Micron’s fiscal Q1 2026 results and, more importantly, its fiscal Q2 2026 guidance, which implied a major step up in revenue, profitability, and margins in the current quarter.
Micron’s investor materials highlighted that the company started fiscal 2026 with record performance and that it has already completed price and volume agreements covering its entire calendar 2026 HBM supply, including HBM4. [2] That matters because HBM is the premium memory used alongside AI accelerators in data centers—one of the highest-margin product pools in the entire memory ecosystem.
Micron earnings: fiscal Q1 2026 hit new highs across revenue, DRAM, and NAND
In prepared remarks for its earnings call, Micron reported fiscal Q1 revenue of $13.6 billion, up 21% sequentially and 57% year over year, marking the company’s third consecutive quarterly revenue record. [3]
Key mix details (important for investors evaluating whether this is “real” quality growth):
- DRAM revenue:$10.8 billion, up 69% year over year, representing 79% of total revenue. [4]
- NAND revenue:$2.7 billion, up 22% year over year, representing 20% of total revenue. [5]
- Non-GAAP EPS:$4.78, up 167% versus the year-ago quarter (and up 58% sequentially). [6]
- Non-GAAP gross margin:56.8%, up 11 percentage points sequentially, driven by higher pricing and favorable mix. [7]
Just as notable for stock-focused readers: Micron emphasized cash generation. The company reported $3.9 billion in free cash flow in fiscal Q1 (a quarterly record, per its prepared remarks), alongside $8.4 billion in operating cash flow and $4.5 billion in capital expenditures. [8]
Micron forecast: Q2 2026 guidance reset expectations higher
The fastest way to understand why MU stock ripped higher is this: Micron guided to record Q2 results with margin expansion on top.
Micron’s published non-GAAP guidance for fiscal Q2 2026 includes:
- Revenue:$18.70 billion ± $400 million
- Gross margin:68.0% ± 1.0%
- Operating expenses:$1.38 billion ± $20 million
- Diluted EPS:$8.42 ± $0.20 [9]
That gross margin number is especially consequential. A 68% gross margin is historically elevated for a mainstream memory manufacturer—signaling unusually strong pricing power and a richer product mix tilted toward high-value data center memory (including HBM).
Micron also explicitly said its guidance does not include potential impacts from new tariffs, a risk factor investors will likely interrogate if trade policy shifts. [10]
The engine under the hood: AI data centers, HBM sold out, and a supply crunch that won’t quit
Micron’s thesis—shared across its investor deck and earnings call prepared remarks—is that memory demand is being structurally reshaped by AI infrastructure spending, with HBM acting as the scarce, high-margin bottleneck.
Two company-provided datapoints stood out on Dec. 18:
- HBM is effectively pre-sold. Micron said it has completed price and volume agreements for its entire calendar 2026 HBM supply, including HBM4. [11]
- HBM’s market size outlook jumped. Micron forecasts an HBM total addressable market (TAM) growing from roughly $35 billion in 2025 to around $100 billion in 2028 (about a 40% CAGR), and it noted that this $100B milestone is projected to arrive two years earlier than its prior outlook. [12]
On the supply side, Micron is telling investors not to expect quick relief. The company expects tight conditions to persist beyond calendar 2026, citing sustained demand alongside supply constraints. [13]
Reuters added color that reinforces the stock-market reaction: CEO Sanjay Mehrotra has said memory markets should remain tight past 2026, and analysts debated how long the upswing (“supercycle”) can last—but with a meaningful camp arguing tightness can extend into 2027. [14]
And importantly for customers (and pricing): Reuters reported Micron may only be able to meet half to two-thirds of demand from some key customers—classic “seller’s market” conditions for a memory supplier. [15]
Capex and capacity: Micron is spending to catch up—carefully
To address persistent tightness, Micron raised its fiscal 2026 capital expenditure plan to approximately $20 billion (up from a prior estimate of $18 billion), weighted to the second half of the fiscal year. [16]
Management also described a broader “supply efforts” push—maximizing output from current footprint, ramping leading-edge nodes, and adding cleanroom space—while pursuing multi-year customer agreements with explicit commitments. [17]
This is a subtle but crucial point for MU stock bulls and bears alike:
- Bulls see disciplined capex + high-value HBM mix as a recipe for sustained margins.
- Bears worry that any industry-wide capacity wave (if Samsung, SK Hynix, and Micron all sprint at once) eventually flips the cycle—because memory has a long history of turning “tight” into “too much” in a hurry.
Micron exits Crucial consumer business: a strategic AI pivot with real-world effects
One underappreciated thread in today’s Micron narrative is portfolio focus. Earlier this month, Micron announced it will exit the Crucial consumer business, continuing shipments through the consumer channel until the end of fiscal Q2 (February 2026) while maintaining warranty support. [18]
Micron framed the move as an allocation decision: AI-driven data center growth has surged memory and storage demand, and exiting lower-priority consumer channels is intended to improve supply for larger, strategic customers in faster-growing segments. [19]
For MU stock, the relevance is straightforward: consumer products can be meaningful volume, but data center AI memory (especially HBM) can be meaningfully better margin.
Analyst upgrades, price targets, and “how high is high?”
Following the results and guidance, multiple firms raised their price targets and/or upgraded Micron. Among the notable moves reported on Dec. 18:
- BofA Securities: upgraded to Buy, target raised to $300
- Rosenblatt: maintained Buy, target raised to $500
- Morgan Stanley: raised target to $350
- Wells Fargo: raised target to $335
- KeyBanc: raised target to $325
- Cantor Fitzgerald: raised target to $350 [20]
Investing.com’s write-up on Cantor Fitzgerald also described an extremely bullish earnings power view—suggesting Micron could reach roughly $40–$50 in EPS in calendar 2026 (with a modeled estimate around $39 in that note), alongside the argument that valuation multiples could move higher than historical peak-cycle norms if the market believes AI has changed the memory cycle’s shape. [21]
Investors.com similarly reported broad post-earnings enthusiasm, pointing to numerous target hikes across major firms and reiterating the “tight supply + sustained AI demand” narrative. [22]
MU stock forecast: what consensus estimates imply after today’s surge
One irony of a big one-day move is that it can “eat” the upside implied by older consensus targets—at least temporarily.
Different aggregators show slightly different consensus snapshots, but the overall pattern on Dec. 18 looked like this:
- StockAnalysis: consensus rating “Strong Buy,” average price target around $264.9 (with a very wide range up to $500). [23]
- TipRanks: Strong Buy consensus (26 Buys, 3 Holds), average target $278.39 (again with wide dispersion). [24]
The takeaway for readers is not that “Wall Street sees only a few percent upside,” but that targets are moving quickly in response to new margin and demand information—especially when the company itself just guided to record revenue and near-record profitability.
Risks to watch: memory cycles, customer concentration, and policy shocks
Even on a day when everything looks like it’s made of rocket fuel and optimism, MU stock still carries real risk—some of it explicitly flagged by Micron and some of it inherent to the sector:
Tariffs and geopolitics: Micron said potential new tariff impacts are not included in its guidance. Policy shifts can hit costs, demand, or supply chains in unpredictable ways. [25]
Cyclicality doesn’t vanish—AI just bends it (maybe): Reuters reiterated that memory is historically cyclical, and investors are effectively wagering that AI demand plus constrained supply discipline can extend the upcycle longer than usual. [26]
Downstream demand sensitivity: Reuters also noted research from Counterpoint expecting global smartphone shipments to decline next year, with rising chip costs as a potential demand headwind—important because not all Micron bits go into AI servers. [27]
Execution risk: Micron is raising capex, ramping advanced nodes, and scaling HBM—high-complexity manufacturing at enormous cost. Any yield, packaging, or ramp missteps can matter when expectations are this high. [28]
Bottom line for Micron stock on Dec. 18, 2025
Micron’s Dec. 18 stock surge is the market pricing in a simple proposition: AI data centers are turning premium memory (HBM, high-capacity DRAM, and enterprise SSDs) into a constrained resource, and Micron is positioned to monetize that scarcity with record revenue guidance and historically strong gross margins. [29]
Whether MU stock can sustain these gains from here will likely come down to three near-term variables: (1) how long HBM and broader memory tightness persists, (2) whether Micron’s capex converts into profitable supply without triggering a future glut, and (3) how macro and policy variables (including tariffs) evolve into 2026.
References
1. www.reuters.com, 2. investors.micron.com, 3. investors.micron.com, 4. investors.micron.com, 5. investors.micron.com, 6. investors.micron.com, 7. investors.micron.com, 8. investors.micron.com, 9. investors.micron.com, 10. investors.micron.com, 11. investors.micron.com, 12. investors.micron.com, 13. investors.micron.com, 14. www.reuters.com, 15. www.reuters.com, 16. investors.micron.com, 17. investors.micron.com, 18. investors.micron.com, 19. investors.micron.com, 20. www.benzinga.com, 21. www.investing.com, 22. www.investors.com, 23. stockanalysis.com, 24. www.tipranks.com, 25. investors.micron.com, 26. www.reuters.com, 27. www.reuters.com, 28. investors.micron.com, 29. investors.micron.com
