The market is not merely rerating a cyclical memory maker. It is trying to decide whether Micron now earns like an AI infrastructure supplier with memory on the label.

The company’s Q2 revenue was up 196% year over year, Micron reported, and the growth came with record revenue across DRAM and NAND. Fiscal Q3 guidance is even more striking because Micron said that one quarter would exceed the full-year revenue of every year through fiscal 2024, Micron reported.

That is why the MU stock price target conversation has turned so aggressive. The business is no longer being judged on a normal memory cycle, at least not yet. Investors are paying for a mix that looks unusually rich and, for now, unusually tight.

HBM is the clearest example. Micron said it began volume shipments of its HBM4 36GB 12H product in the first quarter of calendar 2026, built for NVIDIA’s Vera Rubin platform, and has already sampled a 48GB 16-high version that offers 33% more capacity per stack, Micron reported. It also said development of HBM4E is underway, with volume ramp expected in calendar 2027, Micron reported.

The addressable market matters too. Micron said HBM TAM should grow at about 40% annually through calendar 2028, from roughly $35 billion in 2025 to around $100 billion in 2028, and that the $100 billion mark is now expected two years earlier than it previously thought, Micron reported in December. That kind of revision tends to change valuation models faster than a quarterly beat ever could.

The rest of the data center business is following the same pattern. Micron said data center NAND revenue more than doubled sequentially in fiscal Q2 to a record, and its data center SSD share rose for the fourth straight calendar year in 2025, Micron reported. Cloud Memory Business Unit revenue was a record $7.7 billion, and Core Data Center Business Unit revenue was a record $5.7 billion, Micron reported.

Even the old-fashioned smartphone market is showing how much memory content has changed. Micron said nearly 80% of flagship smartphones shipped in calendar Q4 2025 had 12GB or more of DRAM, up from under 20% a year earlier, Micron reported. Fewer phones may be sold, but each one is carrying more memory. That helps.

There is a catch, because there usually is. A big part of the Q2 jump came from pricing. Micron said DRAM prices rose in the mid-60% range sequentially, while NAND prices rose in the high-70% range, Micron reported. Those are impressive numbers, but they also tell you how tight supply is.

The tighter point is that mix is not a side note here. Micron’s consolidated gross margin reached 75% in fiscal Q2, up 18 percentage points sequentially, Micron reported. Fiscal 2025 gross margin was 41%, Micron reported in September, so the margin step-up is not just a pricing sugar high. Premium HBM, server DRAM and data center NAND are changing the shape of the earnings stream.

Micron also said its 1γ DRAM node is ramping faster than any prior node in its history and should become the majority of DRAM bit mix by mid-calendar 2026, Micron reported. The company expects mature yields on HBM4 faster than HBM3E, which matters because better yields are how memory companies keep margins from leaking away once volume picks up.

The stock is also getting a tailwind from a broader shift in investor money. Goldman Sachs’ research showed mutual funds and hedge funds reweighting toward semiconductors and away from software at the opening of Q2 2026, TradeVAE reported on May 24, 2026.

Goldman’s wider analysis covered roughly $9 trillion in equity positions at the start of Q2, TradeVAE reported on May 24, 2026. The Philadelphia Semiconductor Index recorded an 18-day winning streak from the end of March through the end of April, the SOX is up 72.3% year to date, and the iShares Expanded Tech-Software Sector ETF is down 11.1%, TradeVAE reported on May 24, 2026.

That kind of backdrop helps any Micron stock rally. It does not create the earnings, but it does make investors more willing to pay for them.

The first risk is simple: the AI memory cycle could slow before the new capacity is fully absorbed. Micron said it expects both DRAM and NAND supply-demand conditions to remain tight beyond calendar 2026, Micron reported, but that view assumes demand keeps outrunning supply.

The second risk is the usual one in semiconductors, only larger because the numbers are larger. Micron said fiscal 2026 capex will be above $25 billion, with fiscal 2027 construction-related capex rising by over $10 billion year over year, Micron reported. Its first Idaho fab is still expected to begin wafer output in mid-calendar 2027, Micron reported. If rivals add supply earlier than expected, pricing can cool quickly. Memory has a way of reminding everyone who is boss.

The third risk is positioning. Goldman’s research suggests funds are heavily tilted toward semiconductors already, TradeVAE reported on May 24, 2026. That helps on the way up and gets ugly on the way down if guidance ever disappoints.

Micron’s latest earnings reset is real enough to justify higher estimates. The company has a stronger mix, tighter supply, better pricing and a cleaner growth story than it had a year ago. Those are the ingredients that push the Micron stock price target higher without much persuasion from the sell side.

The open question is how much of this survives when supply catches up. Micron’s own timeline suggests that answer will come in 2027 and 2028, when new fabs, advanced packaging and HBM4E start to meet whatever demand is still standing. Until then, the rally has facts under it. That is more than enough for now.