Image courtesy of 123rf.com

PC builders are entering one of the worst periods to upgrade their workstations and gaming platforms. The relentless memory demand for AI workloads within data centers is collapsing inventory for retail consumers, diverting it to enterprise-grade scaling instead.

Moreover, manufacturers of high-performance DRAM are shifting from DDR4 to DDR5 and LPDDR5X, slowing down the legacy output and exacerbating the shortage. On top of this, after the market downturns in 2022 and 2023, memory manufacturers under-invested in their capacity expansions. Given the complexity of such upgrades, and the REEs required, the demand is now greatly outpacing the memory supply.

According to aggregated data from PCPartPicker, the prices of various DDR4 and DDR5 memory chip modules have increased between 130% and 180% over the last 18 months. For Q4, market research firm TrendForce projects a 75% year-over-year increase. In addition to PCs, the bill of materials (BOM) surge is expected to affect both smartphone and laptop prices in 2026 by an extra 5-15%.

Further exacerbating the problem, Nvidia decided to reduce AI server power drain by switching from high-performance DDR5 to LPDDR memory, which is typically found in tablets and smartphones. This puts Nvidia in the position akin to a large smartphone maker, upsetting the delicate supply chain.The question is, how should investors position themselves in this memory up-cycle?

Micron Technology Inc. (Nasdaq: MU)

Micron has been one of our most covered memory stocks. When we reported on MU stock drop in late March, due to NAND Flash oversupply and lower margin forecast, MU shares were trading at $94. Following October’s price surge driven by AI demand, MU stock is now priced at $227.41 per share.

Since the beginning of the year, we have maintained that Micron is one of the best AI-adjacent stocks to hold, so this price surge should not be surprising.

Capitalizing on AI data center growth in fiscal Q4, ending August 28, 2025, Micron’s cloud memory division exceeded 49% gross margin from the year ago quarter to 59%. Overall, the company generated 46% more revenue YoY in Q4 at $11.32 billion. Of its four divisions, cloud memory has been the most performant, followed by mobile and automotive, both increasing their gross margins to 36% (from 32%) and 31% (from 24%) YoY respectively.

Micron’s Dynamic Random-Access Memory (DRAM) is responsible for 79% of the revenue, while the rest falls to NAND Flash for long-term storage needs.

In particular, after collaborating with Nvidia, Micron has become dominant in the supply of LPDRAM for data servers. Moving forward, the company expects even more gains with the deployment of cutting-edge GDDR7 for ultra–high performance AI workloads. For the PC market, the company achieved record revenue from its solid-state drive (SSD) portfolio, now ready to deploy G9 NAND SSDs.

For calendar 2026, Micron expects further DRAM supply tightness. Therefore, its capex is expected to rise from $13.8 billion in fiscal 2025.

At the current price level of $220.42, MU stock is aligned with its average price target of $228.05 per share. Wall Street Journal’s consensus puts the low-end forecast at $140.88 while the high-end price target is $328 per share. The overwhelming majority of analysts remain in the “buy” camp.

ASML Holding N.V. (Nasdaq: ASML)

Although not a memory stock per se, Dutch ASML underpins the entire chip market as the monopolist with its Extreme Ultraviolet (EUV) lithography machines. In other words, as the foundational bottleneck layer, even companies like Nvidia, TSMC and Samsung are beholden to ASML.

Conversely, as semiconductor and memory chip companies expand their capex to meet the rising demand, ASML will be the beneficiary. Additionally, ASML has the widest moat in the entire semiconductor industry, or any industry, making it a broader civilizational layer worthy of investor exposure.

As of latest Q3 earnings, ASML reported €7.5 billion in net sales at a gross margin of 51.6%, up from 50.8% in the year-ago quarter. For the full-year 2025, ASML projects 15% revenue YoY increase, with a gross margin near 52%.

Investors often neglect ASML in favor of cheaper shares, so its present price of $1,028.13 is still under the average price target of $1,160.08 per share. The bottom outlook for ASML stock is $935, with the potential to go as high as $1,388.70 per share. ASML is one of those stocks that is a no-brainer, but investor’s time preference is calibrated to the noise of cycles.

Pure Storage Inc. Class A (NYSE: PSTG)

This Californian company is focused on purely enterprise-grade flash storage, using Micron’s NAND products. Accordingly, the bulk of Pure Storage’s revenue comes from subscriptions, at around 70%, while the rest falls to hardware sales of various FlashArray systems.

Pure Storage is attractive to any business or organization trying to simplify its storage needs, irrespective of future scaling. With automatic non-disruptive upgrades and stable monthly/annual rate, such a business model is likely to be seen as a meaningful cost-cutting layer within large enterprises.

To that end, the company offers a unified Enterprise Data Cloud (EDC) platform, accessible through application programming interface (API).

As more companies shift to consumption-based IT models, the company’s subscription-first approach has a high potential to lock in long-term customers while providing recurring revenue. In turn, Pure Storage can take on utility-like economics akin to traditional utility companies like AES Corporation.

In Q2 ending August 3, 2025, Pure Storage reported 13% YoY revenue increase to $861 million, with subscriptions going up 15%. With an exceptionally high gross margin of 70.2% (GAAP), the company increased its net income by 32% YoY to $47.1 million.

Pure Storage scheduled its Q3 earnings call, for fiscal 2026, on December 2nd. Against its current price level of $84.72, the average PSTG price target is $92.35 per share. The PSTG stock price target ranges from a low of $55 to a high of $120 per share.

More By This Author:

Why Broadcom Is Surging Today After Nvidia’s Blowout Earnings
Bath & Body Works Posts Soft Q3 Results And Cuts Its Outlook
Plug Power Falls After Announcing $375 Million Convertible Notes Offering