Why Micron may overtake Nvidia as biggest S&P 500 earnings growth driver

Micron Technology is heading into its earnings report with the potential to emerge as one of the biggest beneficiaries of the artificial-intelligence investment boom and challenge Nvidia’s dominance as a driver of stock-market earnings growth.

The memory-chip maker is scheduled to report results on Wednesday, with analysts tracked by FactSet expecting earnings per share to surge 940% in the August quarter from a year earlier.

If analysts’ forecasts are met, Micron could become the largest contributor to S&P 500 earnings growth for the first time in at least two-and-a-half years, according to Seaport Research Partners data, MarketWatch reported.

Micron increasingly becomes an AI market barometer

Micron shares have already gained 243% this year, giving the company a market value of about $1.2 trillion.

The stock has experienced significant swings over the past three months, reflecting both enthusiasm around AI spending and concerns over the sustainability of the massive investment cycle.

Micron is increasingly viewed as a company positioned at the intersection of two major market themes: the durability of AI spending and the concentration of stock-market leadership among a relatively small group of technology companies.

“When you have leadership that’s this narrow, it stops being company-specific, and the report becomes a market event in and of itself,” Jake Behan, Direxion’s head of capital markets, told MarketWatch.

Micron’s stock has “become a referendum on the health of the AI build-out,” Behan added.

Jacob Bourne, a technology analyst at Emarketer, said Micron’s results “should offer a useful indication of whether strength is broadening beyond AI infrastructure.”

That question has become increasingly important for investors as the market weighs whether the enormous spending on AI data centers can eventually translate into broader corporate earnings growth.

Memory prices fuel Micron’s rising influence on the broader market

Micron’s growing influence on the broader market reflects the dramatic improvement in the memory-chip industry.

The company ranked as the ninth-largest contributor to S&P 500 earnings growth in last year’s third quarter, according to FactSet.

Its position subsequently rose to sixth in the fourth quarter and then third during the first half of this year as the memory supply crunch intensified.

Micron’s latest results could push it to the top of that ranking.

FactSet currently expects S&P 500 earnings to increase 29.1% in the third quarter.

Excluding Micron, that growth rate would fall to 24%, according to the research firm.

“Even if you threw Micron out of the S&P, the earnings growth is still insanely good,” said Jonathan Golub, chief investment strategist at Seaport Research Partners.

According to JPMorgan, semiconductor companies, including Nvidia, make up 20% of S&P 500 market capitalisation, but contributed to 40% of total S&P 500 earnings growth in Q2.

Micron’s Q3 corresponds to the Q2 results released by the rest of the companies listed on US markets, since the company’s fiscal year ends with September, while most corporations align their fiscal year directly with the calender year ending December 31.

The result would nevertheless highlight how important Micron has become to the earnings outlook as AI-related demand spreads through the semiconductor industry.

Citi raises PT ahead of results, JPM reiterates Overweight rating

Expectations have also strengthened among Wall Street analysts.

Citi analyst Atif Malik recently raised his price target for Micron to $1,300 from $1,150, pointing to stronger DRAM pricing and continued tight supplies of memory and storage products amid the expansion of AI infrastructure and data centers.

The raised PT reflects a 20% upside from Friday’s close.

Malik expects Micron to beat its fiscal fourth-quarter estimates as DRAM and NAND markets remain tight.

DRAM prices increased more than 60% in Micron’s third quarter, while NAND prices rose more than 80%.

JPMorgan has reiterated its Overweight rating and $1,540 price target on the stock.

The firm expects Micron to raise its November-quarter guidance, citing stronger aggregate demand signals from customers, management’s expectation that supply conditions will be tighter in 2027 than in 2026, and continued momentum in the HBM4 ramp-up.

JPMorgan noted that Micron had already shipped more than $1 billion worth of HBM4 as of the May quarter.

The earnings report will arrive before the broader third-quarter earnings season accelerates next month, making Micron one of the first major indicators of how AI-related semiconductor demand is translating into corporate profits.

Investors brace for a sharp post-earnings move

The options market is signaling that investors expect a substantial reaction when Micron reports.

Options currently imply a post-earnings move of roughly 8% to 10%, equivalent to about $87 to $108 based on the stock’s current price.

That potential swing underscores the importance of the report beyond Micron itself.

With AI infrastructure spending expected to remain a major driver of technology investment, the company’s results could provide investors with another indication of whether soaring demand for computing infrastructure is translating into sustained pricing power and earnings growth.