Memory chips store the data and instructions that power Nvidia’s accelerated computing platforms, as well as the world’s computers and smartphones. These chips are, put simply, the filing cabinets of the digital economy.
Since the late 1980s, the memory semiconductor market has been characterized by boom-and-bust profit cycles. Periods of strong profitability have routinely been followed by collapses in margins and earnings. Investors thus concluded that memory chips were simply another commodity product. But beginning in 2024, with the arrival of the Artificial Intelligence Revolution, the financial characteristics of the memory chip market began to change.
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Nvidia’s accelerated computing systems require vast amounts of advanced memory with embedded intellectual property. Moreover, each new generation of Nvidia processors requires even greater memory capacity. The AI Revolution has transformed the memory chip market from a commodity operation into a highly proprietary semiconductor business with high margins and significant barriers to entry.
Micron and two South Korean companies, S.K. Hynix and Samsung, effectively dominate the market for AI memory chips. The stock prices of all three companies reflect the dramatic changes reshaping the industry. This year alone, Micron’s stock price has more than doubled. Over the past 12 months, the stock has risen roughly 800%. Micron’s financial results mirror that remarkable price appreciation. The company’s earnings grew by more than 10-fold in the quarter ended May 2026. Micron management believes this extraordinary growth will continue into early 2028 and perhaps even longer.
Yet, despite this positive outlook, many investors continue to believe that Micron designs and manufactures commodity semiconductors. That misconception helps explain why the company’s price-to-earnings multiple is less than half that of the broader S&P 500. But there is a compelling case that memory chips are no longer commodity products with highly cyclical revenue and profit streams. Moreover, there is much more to the Micron story than supplying memory for Nvidia and other technology companies.
The company is beginning to experience rapid growth by supplying memory chips for autonomous vehicles. Micron’s management believes humanoid robots could become another major growth market. Today’s automobiles typically contain relatively modest amounts of memory, primarily supporting entertainment and information systems, as well as basic driver assistance features. However, as vehicles evolve toward full autonomy, memory requirements increase dramatically. Micron estimates that fully autonomous vehicles could require nearly 20 times the amount of memory found in many current vehicles.
This surge in demand is driven by dozens of high-resolution cameras, radar systems, ultrasonic detectors, and increasingly sophisticated AI models that must process millions of calculations every second. Every autonomous vehicle effectively becomes a rolling supercomputer.
The memory requirements for humanoid robots are even greater. Each humanoid robot is expected to require roughly ten times the memory capacity of a semi-autonomous vehicle. Today, the humanoid robot market remains relatively small, generating perhaps $5 billion in annual revenue. However, the industry is projected to grow at a compound annual growth rate of roughly 40% through the end of the decade. Morgan Stanley believes the humanoid robot market could ultimately reach $5 trillion over the next few decades.
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Demand for proprietary memory chips is growing so rapidly that even the aggressive capital investment programs of Micron and its two South Korean rivals may prove insufficient to keep pace.
Top line: Micron is increasingly becoming a high-margin growth company rather than a cyclical commodity producer. As investors begin to recognize the company’s expanding opportunities in AI, autonomous vehicles, and humanoid robots, its valuation could rise substantially.
The writer owns shares in Micron and Nvidia.
James Rogan is a former U.S. diplomat who later worked in law and finance for over 30 years. He writes a daily note on markets, economics, politics and social issues. He can be reached at [email protected].
