Memory in 2025: The fastest growing and most overlooked COGS of AI
HBM is the fastest growing part of AI infrastructure COGS, and it is well understood. Implications for manufacturers aren’t.First, HBM doesn’t grow alone, AI servers need DDR DRAM as well, and non-AI servers are now in a recovery phase, after having been neglected for a few years. Other segments will be weak next year, but won’t be a material headwind to datacenter growth. We expect Memory COGS in 2026 10% above consensus, across the industry.
Second, datacenter growth is tightening supply rapidly, which should lead to more margin and earnings expansion than consensus expects.
This should result in earnings in FY26 for Micron 40% above consensus.
Micron Technology provides memory and storage solutions. The company's portfolio of memory and storage technologies include Dynamic Random Access Memory, Not And, 3D XPoint? memory, and Not Or. The company's segments are: Compute and Networking Business, which includes memory products sold into client, cloud server, enterprise, graphics, and networking markets; Mobile Business, which includes memory products sold into smartphone and other mobile-device markets; Storage Business, which includes Solid-State Drives and component-level solutions sold into enterprise and cloud, client, and consumer storage markets; and Embedded Business, which includes memory and storage products.
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