PC builders are currently navigating one of the most challenging periods for upgrading their workstations and gaming platforms. The intense demand for memory driven by AI workloads in data centers is significantly depleting inventory for retail consumers, with resources being diverted to enterprise-grade scaling.
Adding to this pressure, manufacturers of high-performance DRAM are transitioning from DDR4 to DDR5 and LPDDR5X. This shift is leading to a slowdown in the production of legacy memory types, further intensifying the shortage. Moreover, following the market downturns experienced in 2022 and 2023, memory manufacturers reduced their investments in capacity expansion. The current demand is now substantially outpacing the available memory supply, especially considering the intricate nature of such upgrades and the requirement for rare earth elements.
Data aggregated from PCPartPicker indicates that the prices for various DDR4 and DDR5 memory chip modules have seen an increase of 130% to 180% over the past 18 months. For the fourth quarter, market research firm TrendForce projects a 75% year-over-year increase in memory prices. Beyond PCs, this surge in the bill of materials is also expected to impact the prices of smartphones and laptops between 2026, with an additional increase of 5% to 15%.
Further complicating the situation, Nvidia has opted to reduce AI server power consumption by switching from high-performance DDR5 to LPDDR memory, a type typically found in tablets and smartphones. This strategic move positions Nvidia similarly to a major smartphone manufacturer, creating disruptions within the delicate supply chain. The critical question for investors is how to best position themselves during this memory up-cycle.
Micron Technology Inc. (NASDAQ: MU)
Micron has been a prominent focus in our coverage of memory stocks. When we previously reported on MU stock's decline in late March, attributed to NAND Flash oversupply and a lower margin forecast, MU shares were trading at $94. Following a significant price surge in October, driven by AI demand, MU stock is now priced at $227.41 per share.
Since the beginning of the year, we have consistently identified Micron as one of the top AI-adjacent stocks to hold, making its recent price appreciation unsurprising.
Capitalizing on the growth of AI data centers, Micron's cloud memory division reported a gross margin of 59% in fiscal Q4, ending August 28, 2025, an increase from 49% in the year-ago quarter. Overall, the company's revenue for Q4 increased by 46% year-over-year, reaching $11.32 billion. Among its four divisions, cloud memory demonstrated the strongest performance, followed by mobile and automotive, both of which saw their gross margins rise to 36% (from 32%) and 31% (from 24%) year-over-year, respectively.
Micron's Dynamic Random-Access Memory (DRAM) accounts for 79% of its revenue, with the remaining portion derived from NAND Flash for long-term storage solutions.
Notably, through its collaboration with Nvidia, Micron has established a dominant position in supplying LPDRAM for data servers. The company anticipates further growth with the introduction of cutting-edge GDDR7 technology, designed for ultra-high performance AI workloads. For the PC market, Micron has achieved record revenue from its solid-state drive (SSD) portfolio and is preparing to deploy G9 NAND SSDs.
Micron projects continued tightness in the DRAM supply for calendar year 2026. Consequently, its capital expenditures are expected to increase from $13.8 billion in fiscal 2025.
At its current price level of $220.42, MU stock is trading close to its average price target of $228.05 per share. The Wall Street Journal's consensus forecast ranges from a low of $140.88 to a high of $328 per share. The vast majority of analysts maintain a "buy" recommendation for MU stock.
ASML Holding N.V. (NASDAQ: ASML)
While not exclusively a memory stock, Dutch company ASML plays a pivotal role in the entire semiconductor market as the sole provider of Extreme Ultraviolet (EUV) lithography machines. This makes ASML a foundational bottleneck for the industry, with companies like Nvidia, TSMC, and Samsung reliant on its technology.
As semiconductor and memory chip manufacturers increase their capital expenditures to meet escalating demand, ASML is positioned to be a significant beneficiary. Furthermore, ASML possesses the widest competitive moat within the semiconductor industry, and arguably across all industries, making it a strategically important company for investors.
In its latest third-quarter earnings report, ASML announced net sales of €7.5 billion, with a gross margin of 51.6%, an improvement from 50.8% in the same quarter last year. For the full year 2025, ASML forecasts a 15% year-over-year revenue increase, with a gross margin close to 52%.
Investors often overlook ASML in favor of stocks with lower share prices. Currently trading at $1,028.13, its price remains below the average price target of $1,160.08 per share. The stock's price target ranges from a low of $935 to a high of $1,388.70 per share. ASML represents a compelling investment opportunity, though investor focus is often drawn to the more cyclical aspects of the market.
Pure Storage Inc. Class A (NYSE: PSTG)
This California-based company specializes in enterprise-grade flash storage solutions, utilizing Micron's NAND products. The majority of Pure Storage's revenue, approximately 70%, is generated from subscriptions, with the remainder coming from hardware sales of its various FlashArray systems.
Pure Storage appeals to businesses and organizations seeking to streamline their storage infrastructure, regardless of future scalability needs. With its automatic non-disruptive upgrades and predictable monthly or annual rates, its business model offers a significant cost-saving advantage for large enterprises.
To facilitate this, the company provides a unified Enterprise Data Cloud (EDC) platform, which is accessible via an application programming interface (API).
As more companies adopt consumption-based IT models, Pure Storage's subscription-first approach is well-positioned to secure long-term customer relationships and generate recurring revenue. This model allows Pure Storage to operate with utility-like economics, similar to traditional utility companies.
In its second quarter, ending August 3, 2025, Pure Storage reported a 13% year-over-year revenue increase to $861 million, with subscription revenue growing by 15%. The company achieved a notably high gross margin of 70.2% (GAAP) and saw its net income increase by 32% year-over-year to $47.1 million.
Pure Storage has scheduled its third-quarter earnings call for fiscal year 2026 on December 2nd. Against its current stock price of $84.72, the average price target for PSTG is $92.35 per share. The price targets for PSTG stock range from a low of $55 to a high of $120 per share.