Micron Technology’s stock has risen by almost 9x over the past twelve months, taking its market capitalization above $800 billion – one of the largest single-year gains in the company’s four-decade trading history. The rally is driven by surging demand and a shortage of high-bandwidth memory, the specialized chips that sit alongside AI accelerators in data centers. Micron has pre-sold its entire HBM production through 2026 under binding contracts. Hyperscalers, including Microsoft (MSFT), Alphabet (GOOG), and Meta (META), are projected to spend roughly $700 billion on AI infrastructure this year, and memory is a critical input at every stage of that build-out. The stock also might appear like a steal trading at a mere 14x estimated FY ’26 earnings and 8x next year’s earnings. See MU valuation metrics However, the memory markets are extremely cyclical. So how has the stock reacted in past crashes?
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How Memory Cycles Typically Collapse
The memory industry has produced multiple severe price collapses in the past fifteen years, all sharing the same underlying cause. Building a new DRAM fabrication facility takes two to three years and costs tens of billions of dollars. Once built, the economics strongly favor running it at maximum capacity regardless of the prevailing price. Demand surges, prices spike, manufacturers commit to new capacity, and by the time that capacity comes online, the market it was built for no longer exists.
The 2022-2023 Memory Crash: The 2022 to 2023 downturn was one of the most severe in financial terms. Post-pandemic demand evaporated. Supplier inventories reached 31 weeks by early 2023. Micron reported a GAAP net loss of $2.31 billion in a single quarter, its largest ever; cut its workforce by 10%; and sharply reduced its capital budget. The stock declined roughly 50% from early 2022 levels and traded at about 11x forward earnings at its peak.
The 2018-2019 Inventory Unwind: During 2018 and 2019, cloud operators over-ordered memory through 2017, then steadily reduced purchases through 2018 as inventories swelled. NAND prices fell roughly 60% and DRAM approximately 40%. Micron peaked near $64 in May 2018 and fell to around $28 by year-end, a decline of approximately 57%. At the stock’s May 2018 peak near $64, the forward P/E based on fiscal year estimates was approximately 4.5x.
The 2014-2016 DRAM Downturn: During the 2014 to 2016 crash, DRAM capacity had expanded ahead of PC demand that never arrived as consumers shifted to mobile devices. Prices fell consistently through 2015. Micron’s stock dropped approximately 70%, from around $37 in late summer 2014 to under $10 by February 2016.
