SK Hynix Just Announced Huge News for Micron Shareholders
Korean memory chip company SK Hynix (SKHY +2.72%) is one of the major players in this industry and a competitor to Micron Technology (MU +5.58%). So, how can its announcement of huge news affect Micron? Well, it has to deal with the state of the industry that these two operate in.
There isn’t a ton that separates one memory chip producer from another, and the products are fairly commoditized. As a result, chip prices are highly driven by supply and demand laws.
Right now, demand is high, and supply is low, so prices are soaring. While times are good right now, the market is worried that demand will eventually soften, and the companies in this space will see their businesses collapse as a result. However, SK Hynix just pushed that date out further.
During its most recent earnings report, SK Hynix noted that its DRAM and HBM (high bandwidth memory, the type that’s utilized in AI computing units) were sold out through 2029. That’s big news, and most likely the same will happen to Micron as well.
As a result, demand for memory chips will remain high, which should boost Micron’s stock. The market hasn’t priced this in yet, so now is the perfect time to buy.
Image source: The Motley Fool.
Micron has major expansion plans in the works
Micron has been vocal about market conditions, but that hasn’t been reflected in the company’s stock price. Micron told investors during its most recent quarter that market conditions would worsen in 2027 and 2028 for its clients compared with 2026. If you’ve followed the memory chip market during 2026, that seems like an unfathomable statement, but it’s where the industry is.
SK Hynix’s news that 2029 could be just as bad further extends the bull case for memory chipmakers. Furthermore, if SK Hynix is already announcing that it has sold out of capacity three years from now, high AI demand will likely continue into 2030 and 2031. As a result, there could be several years’ worth of strong growth ahead for anyone involved in the memory chip space.
MU – Micron Technology
$692.99+$36.60 (+5.58%)
NASDAQ · As of 3:01 PM ET 11/06/26
However, Micron has another boost up its sleeve. The company is building several new production facilities, including one scheduled to open in mid-2027, and another in late 2028 in the U.S. Internationally, Micron has two more facilities scheduled to open in 2027, and another two in 2028. So, Micron’s total production capacity should be significantly expanded over the next two years, and today’s market conditions will likely persist, keeping memory chip prices high.
Micron’s stock is dirt cheap
That could cause a huge growth explosion in the company and, likewise, in the stock. However, none of this is priced into Micron’s stock right now. Right now, Micron trades at 5 times fiscal year (FY) 2027 earnings.
MU PE Ratio data by YCharts
For a long time, the stock averaged between 20 and 25 times trailing earnings. Should Micron hit estimates and rise to those levels, that would require the stock to rise 4x to 5x next year. Now, if it has another excellent 2028 and 2029, as the market outlook indicates it could, who knows where Micron’s stock is headed? This requires the market to cooperate and value the stock like it did over the past year and a half. Depending on AI sentiment, this may or may not happen, but with how much growth Micron is expecting, I think market-crushing returns are easily in the cards.
The reality is that there are few stocks with as impressive a runway as Micron’s. However, given Micron’s cyclical history, the market is not valuing it properly. I think that will change in the next few months as the market realizes how long this AI build-out will last, and that could catapult Micron’s stock to new heights. It’s one of my top AI stock picks right now, and it’s not too late to buy shares.
Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.