Micron stock climbs as CEO highlights AI demand for memory

Micron Technology experienced a notable 6% uptick in its stock price on Friday, buoyed by investor interest in companies involved in the AI chip supply chain. This surge followed a strong earnings report from Taiwan Semiconductor Manufacturing Company, which indicated ongoing investments in AI infrastructure. Over the past month, shares of Micron have surged by 52%, driven by a global shortage of memory and an unprecedented demand spike. Memory components are essential for AI systems, allowing them to efficiently manage large datasets in proximity to graphics processing units (GPUs), thereby facilitating the operation of extensive AI models without latency. "The demand driven by AI is rapidly accelerating," stated Micron CEO Sanjay Mehrotra during an interview with CNBC's Jim Cramer. "This is not just a trend; it's a reality that requires an increasing supply of memory to meet growing needs." Mehrotra announced that Micron is investing a staggering $200 billion in expanding production capabilities in the United States. This includes the establishment of two new fabrication facilities in Idaho and a sprawling 600,000-square-foot facility in Clay, New York, where construction commenced on Friday. Commerce Secretary Howard Lutnick was present for the groundbreaking ceremony, with Micron pledging $100 billion for this new fab. In addition to these new facilities, Mehrotra mentioned plans to enhance production in existing plants in the short term. Initially, Micron projected a 10% growth in server memory by early 2025, but that expectation has since escalated to high teens by year's end. The company has also reported unexpectedly robust growth in memory and storage for personal computers. "We anticipate that the current tightness in the memory market will persist until 2027, indicating strong industry fundamentals in the near future, largely fueled by AI demand," Mehrotra added. The heightened quest to fulfill the memory needs of tech giants such as Nvidia, Advanced Micro Devices, and Google has led to significant shortages. Analysts previously forecasted a 55% increase in prices for these critical components in the first quarter of the year.