Artificial intelligence has broken the 40-year cycle: Micron's margin has soared to 85%
The memory market has ceased to be a "cyclical nightmare" for chip manufacturers. We are witnessing a historic shift that breaks the established model that existed for about forty years. The key trigger is the explosive demand for artificial intelligence solutions.
Take Micron's earnings report. The company's gross margin reached 85%, while a year ago this figure was only 39%. A more than twofold increase is not just a correction; it is a paradigm shift. Revenue for the year quadrupled to $41 billion, and net profit surged from $1.9 billion to $28 billion. Such figures have never been seen in the memory sector.
For four decades, the memory business was one of the worst in technology. Chips were perceived as a commodity—sold by the ton, with margins dropping to nearly zero every few years. The cycle was relentless: price increases → factory construction → overproduction → collapse. Now this mechanism has been halted.
Micron's management stated that the shortage will last at least until 2028. Moreover, the company has already secured half of its future revenue in long-term contracts. A commodity cannot boast such commitments—this is the prerogative of a bottleneck in the supply chain.
Why the value of memory has changed
The reason is not a change in the product itself. Memory as a technology has not fundamentally changed. The context has shifted: AI computing machines cannot operate without enormous amounts of memory, and there is a catastrophic shortage for everyone. It is the scarcity, not the evolution of the chip, that has turned the market upside down.
Artificial intelligence has transformed the most undervalued business in technology into the most profitable "hardware" on earth. The cycle has not reversed—it has been broken. And this is not a temporary anomaly, but a new reality for the entire semiconductor industry.
Expert opinion: For investors in the crypto and tech sectors, this is a signal: infrastructure components (memory, chips) are becoming strategic assets. Production shortages and long-term contracts create prerequisites for sustainable margin growth, which directly impacts stock prices and the overall dynamics of the semiconductor market.