The soaring investment in data center infrastructure to enable artificial intelligence has created a shortage of memory, causing prices to spike and offering support for Micron Technology’s upcoming quarterly earnings report.
The memory bottleneck has been called out as a growing problem for suppliers of high-end AI servers, including Dell. In its third-quarter earnings call, Dell said higher memory prices are increasing its costs and memory shortages are challenging.
“We’re in a very unique time. It’s unprecedented. We have not seen costs move at the rate that we’ve seen. And by the way, it’s not unique to DRAM. It’s NAND,” said Dell Vice Chairman Jeffrey Clark.
The tailwinds behind a budding memory supercycle aren’t lost on Goldman Sachs. The 156-year-old investment firm is arguably the most respected Wall Street research firm, and it’s witnessed its fair share of memory supercycle booms and busts since Intel released the 1024-bit (1K) Intel 1103 DRAM chip, the first mass-produced semiconductor memory chip, in 1970.
This week, Goldman Sachs analysts provided updated thoughts on Micron ahead of its planned quarterly earnings call on Dec. 17. The analysts offered a mostly bullish outlook, calling for results higher than Wall Street’s consensus estimates. They also weighed in with early thoughts on how 2026 may shape up, and detailed the key things to watch in Micron’s report that could move its stock price.
Memory market catches fire on AI demand
A gold rush to secure high-performance computing power has been underway since 2022, when the release of ChatGPT sparked a frenzy of AI research and development. Almost everyone is using large language models to complement, and sometimes replace, traditional search. And most companies are knee deep in developing and implementing agentic AI apps that can streamline, assist, and in some cases, replace workers.
The pace of AI R&D rivals the dawn of the Internet; however, the required data center horsepower far exceeds anything witnessed to date. As a result, the largest cloud service providers are investing hundreds of billions of dollars in next-generation servers powered by AI-optimized chips, such as GPUs, TPUs, and XPUs.
“Training is significantly and increasingly compute-intensive, but early LLM demands were manageable. Today, compute needs are accelerating rapidly, particularly as more models move into production,” wrote JP Morgan strategist Stephanie Aliaga in October. “Nvidia estimates that reasoning models answering challenging queries could require over 100 times more compute compared to single-shot inference.”
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The rush to retrofit data centers with AI-optimised server racks has exposed a series of supply bottlenecks, including shortages in the memory market, which is dominated by Samsung, SK Hynix, and Micron (MU). These companies market DRAM (Dynamic Random Access Memory), NAND flash, and High Bandwidth Memory (HBM), a high-demand memory specially designed for AI applications.
The lack of supply has led to surging memory prices in the spot market, which, in turn, are beginning to flow through into contracted supply prices. As a result, talk of a budding memory supercycle has emerged, fueled in part by major capacity expansion announcements from the major players, including Micron, which recently exited the consumer memory market to free up more memory production for the AI market.
“The AI-driven growth in the data center has led to a surge in demand for memory and storage. Micron has made the difficult decision to exit the Crucial consumer business in order to improve supply and support for our larger, strategic customers in faster-growing segments,” said Sumit Sadana, EVP and Chief Business Officer at Micron Technology.
The surge in demand, tight supply, and spikes in memory prices have led Wall Street firms, including Goldman Sachs, to boost their outlook for Micron, which is expected to report quarterly results mid-month.
Goldman Sachs issues Micron pre-earnings forecast
Goldman Sachs expects a strong report from Micron and predicts Micron will offer upbeat guidance.
In a research note shared with TheStreet, Goldman Sachs’ analysts wrote:
Goldman Sachs’ analysts anticipate that Micron will deliver third-quarter revenue of $13.2 billion, surpassing Wall Street’s consensus estimate of $12.7 billion. They expect $4.15 per share in earnings, which is above the average estimate of $3.84.
They also expect the gross margin to be 53.6%, which is higher than Wall Street’s consensus of 51.6%.
Overall, ahead of Micron’s earnings, Goldman Sachs raised its revenue and non-GAAP EPS estimates by 9% and 19% for 2026 and 2027 “to account for more positive industry pricing trends since our last update.”
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Goldman Sachs expects investors will focus on three key themes within Micron’s report to inform sentiment into 2026:
- Sustainability of pricing strength – It expects “further color on whether the current pricing upcycle can sustain over the next few quarters in DRAM.”
- HBM roadmap – Goldman Sachs anticipated the company will “comment on its near-term share target in HBM, and to what extent HBM4 will improve the company’s position.”
- Gross margin path – Its analysts “believe additional commentary on the path forward for gross margin will be important.”
What’s next for Micron?
Goldman Sachs’ revised 2026 revenue and earnings estimates are 5% and 10% above Wall Street’s consensus outlook, suggesting that if Goldman’s modeling is correct, many analysts will be forced to play catch-up, increasing their projections.
Currently, Goldman Sachs’ latest number crunching is modeling 2026 revenue of $60.8 billion, up from $57.2 billion previously, and 2027 revenue of $68.9 billion, up from $62.2 billion.
On the bottom line, its analysts project calendar 2026 EPS of $21.01 and 2027 EPS of $23.81.
Goldman Sachs’ new earnings outlook also led it to reconsider its stock price target. It now thinks Micron shares could trade to $205, up from a prior target of $180.
It lists the following as catalysts that could impact outlooks:
- “Continued execution on the company’s HBM roadmap and share gain vis-a-vis Samsung and SK Hynix,
- Sizable step-up (above current expectations) in HBM content for AI accelerators,
- Continued signs of CXMT gaining DRAM market share, negatively impacting pricing dynamics.”
Goldman Sachs isn’t the only Wall Street firm expecting a surge in Micron. In a research note shared with TheStreet, Morgan Stanley also struck a bullish tone.
“We are entering uncharted territory, as we have a 2018 style shortage forming but from a much higher EPS starting point; we expect serial upwards revisions to continue,” wrote Morgan Stanley’s Moore in a research note. “Since we upgraded MU to OW a little over a month ago, DDR5 spot pricing has tripled and in a historic sense, to find this kind of move in DRAM pricing you’d likely have to go back to the cycles of the 1990s.”