Micron briefly overtakes Meta, Tesla on AI chip demand surge

Micron Technology MU briefly moved ahead of Meta Platforms (META) and Tesla (TSLA) in market capitalization on Thursday, after a strong outlook from the memory chipmaker extended its rally driven by artificial intelligence demand.

Micron’s shares had surged 18.4% at $1,236, giving the company a market value of $1.398 trillion.

This compared with Meta’s $1.392 trillion, while Tesla stood at about $1.4 trillion, according to the data.

The stock is currently trading 9.6% up.

The move comes after Micron’s fourth-quarter revenue and profit forecasts helped reverse a recent slump.

The company also said customers had committed $22 billion to secure memory chip supply.

Micron first crossed the $1 trillion valuation mark on May 26, joining other major semiconductor names benefiting from strong investor interest in companies tied to Big Tech’s AI infrastructure spending.

Revenue surge driven by data center demand

Micron reported that revenue in the second quarter quadrupled, supported by what it described as a demand-driven chip shortage expected to extend beyond 2027. This marks a shift from earlier expectations that the shortage would end in the near term.

The company now has 16 long-term chip supply agreements in place.

Adjusted earnings came in at $25.11 per share on revenue of $41.5 billion, representing a 346% increase from a year earlier. Adjusted gross margin stood at 85%, while adjusted operating margin reached 81%.

Growth was led by Micron’s two data-center segments, which together expanded 415% year-on-year to $25 billion.

These segments now account for 61% of total sales.

The company also reported $18 billion in free cash flow for the quarter and said cash, equivalents, and short-term investments rose to $26 billion at the end of May, up from $14 billion three months earlier.

Analysts raise targets amid “new era in memory”

Following the results, analysts pointed to a structural shift in Micron’s business profile.

D A Davidson analyst Gil Luria said, “We posit that Micron has entered an era where it has some of the semi industry's best visibility, a far cry from its historical role in the semi market,” raising his price target to $2,000 from $1,500 in a note titled “New Era in Memory.”

KeyBanc also lifted its target sharply to $1,600 from $600, with analyst John Vinh stating, “We believe Micron deserves to be further rerated.”

Wedbush analysts described the results as a “much needed drop the mic quarter to alleviate memory concerns.”

“We are seeing no cracks in AI demand on the chips/ hardware or software front which gives us a bright green light to own the core tech winners into year-end,” they added.

However, Futurum chief market strategist Shay Boloor cautioned on valuation interpretation, saying, “This print is a major validation of the memory supercycle thesis but I wouldn't value Micron by simply annualizing peak margins forever,” adding that normalized earnings power has likely moved higher but cyclicality has not disappeared.