Micron stock soars: the company is seeking to profit from the "hungry" market

Micron Technology’s stock rose over 5% on Tuesday after the company announced plans to build new manufacturing facilities aimed at addressing the storage chip shortage. Although this capacity expansion will not be realized immediately, the timing of the announcement was well-received by investors.

Market Status: The “Despair” of the NAND Market On Monday evening, Micron announced plans to build an advanced wafer fabrication plant in its Singapore campus dedicated to NAND flash manufacturing. Rosenblatt analyst Kevin Cassidy noted in a report on Tuesday: “It’s clear that the NAND market is extremely eager for more supply.”

NAND flash has become a core component for data center operations involving artificial intelligence (AI) models, specifically inference processes. This type of flash memory is non-volatile storage, meaning it can store data even when power is off, and is widely used in flash drives and smartphones.

Pricing Power Driven by Supply Shortages Long-standing concerns over cyclical market oversupply have kept storage chip suppliers hesitant to increase capacity. Currently, demand far exceeds supply, allowing companies to continuously raise prices. Market participants generally worry that too rapid capacity expansion could weaken this pricing power and lead to excess inventory if demand reverses.

Mizuho analyst Vijay Rakesh pointed out that although NAND demand is expected to grow over 20% in 2026, no new capacity will come online in 2023 or 2027. This leaves storage vendors room to significantly raise prices over the next two years. He forecasts that driven by AI server demand, NAND prices will increase by 330% annually this year and another 50% in 2027.

Additionally, Nvidia’s Rubin platform’s new storage architecture, designed to improve inference efficiency, is seen as another key driver of NAND demand. Based on this, Rakesh has raised Micron’s target price to $480, representing a 23% upside from Monday’s closing price.

Long-term Investment Plans Micron’s new facility will ultimately provide 700,000 square feet of cleanroom capacity, with a planned investment of $24 billion over ten years. Micron stated that the new NAND wafer production is expected to begin in the second half of 2028.

Following Micron’s announcement, other NAND producers—including SanDisk, Kioxia of Japan, and South Korea’s Samsung Electronics and SK Hynix—also saw their stock prices rise on Tuesday.

Mizuho trader Jordan Klein said that in his more than twenty years observing the storage sector, he has never seen a market caught in such a “buying frenzy” due to companies announcing “capacity increases.” He added that other NAND manufacturers may follow Micron’s expansion efforts, or risk losing market share and facing falling prices as competitors ramp up production.