Think You Missed Out on Micron’s Run? Think Again.
Micron Technology (MU -4.98%) has been on a phenomenal bull run over the past year, with its shares jumping nearly 350% in such a short time.
Micron’s stunning rally has been driven by impressive growth in both revenue and earnings. The company has emerged as a key player in the global artificial intelligence (AI) data center market, as the memory and storage chips it manufactures help store large data sets and transport data rapidly within data centers and AI chip clusters.
However, investors may now be wondering whether Micron can replicate its bull run. The good news is that it can indeed soar higher, as strong demand for memory chips and tight supply conditions in the industry are likely to persist.
Image source: Micron Technology.
Memory supply is expected to tighten further
AI has created astronomical demand for dynamic random-access memory (DRAM) and NAND flash storage. However, supply growth has significantly trailed the increase in memory demand, leading to a sharp rise in prices.
MU – Micron Technology
$934.27-$48.96 (-4.98%)
NASDAQ · As of 4:00 PM ET 10/29/26
Importantly, Micron management has great news for investors who missed its bull run over the past year. CEO Sanjay Mehrotra noted on Micron’s September earnings call:
We expect memory and storage supply demand conditions to be much tighter in calendar 2027 and 2028 than they were in 2026.
This is a clear indication that the favorable pricing environment supporting Micron’s growth isn’t going anywhere. For instance, the contract price of high-bandwidth memory (HBM) used in AI accelerators is anticipated to jump by 70%-140% in 2027, according to market research firm TrendForce.
The anticipated jump in HBM prices next year will encourage memory manufacturers to allocate more capacity to producing these chips. Given that HBM consumes three times the wafer capacity of a traditional DRAM chip, it is easy to see why Mehrotra sees tighter memory supply conditions over the next couple of years.
Micron’s outstanding growth potential and cheap valuation indicate that it isn’t too late for investors to buy it
Micron ended fiscal 2026 with a 9x increase in adjusted earnings per share to $75.52. The stock trades at just 14 times earnings despite such phenomenal growth, a discount to the tech-focused Nasdaq Composite index’s earnings multiple of 41.
The forward earnings multiple of 5 is even cheaper, especially considering that Micron’s earnings are anticipated to increase by 133% this fiscal year. Moreover, Micron’s earnings growth could outpace the 17% year-over-year increase that analysts are projecting for fiscal 2028 due to the tightening memory supply.
All this indicates why Micron’s 12-month price target of $1,575 implies potential gains of 60%. However, I won’t be surprised to see larger gains in 2027 and beyond, as Micron stock should ideally command a premium valuation given the outstanding earnings growth it is poised to deliver.
Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.