Think You Missed Out on Micron's Run? Think Again.
Tighter memory supply in 2027 can send Micron stock higher.
Micron Technology has experienced an incredible surge in its stock price over the past year, with shares increasing by nearly 350%. This remarkable growth has been fueled by robust revenue and earnings expansion. As a prominent entity in the global artificial intelligence (AI) data center market, Micron's manufactured memory and storage chips play a vital role in storing vast data sets and facilitating rapid data transmission within data centers and AI clusters.
Investors may now be contemplating whether Micron can maintain its impressive performance, but there's reason to believe it can continue to soar even higher. Demand for memory chips remains robust, driven by the expanding AI sector, while supply constraints have led to escalating prices. In fact, Micron's management has conveyed optimistic projections for investors who missed the recent bull run.
CEO Sanjay Mehrotra highlighted the anticipated continuation of tighter supply and demand conditions for memory and storage in fiscal years 2027 and 2028.
These favorable conditions, coupled with an expected surge in high-bandwidth memory (HBM) prices by 70%-140% in 2027, should encourage memory manufacturers to allocate more production capacity to creating these chips. HBM, essential for AI accelerators, consumes significantly more wafer space than conventional DRAM, making it clear why Mehrotra anticipates tighter memory supply in the near future.
Despite Micron's stock trading at just 14 times earnings, which is a discount to the tech-focused Nasdaq Composite's earnings multiple of 41, the forward earnings multiple of 5 is even more attractive. This is further bolstered by Micron's anticipated earnings growth of 133% this fiscal year. Moreover, given the tightening memory supply, Micron's earnings growth could potentially outpace analyst expectations of 17% year-over-year increase in fiscal 2028.
With a 12-month price target of $1,575, Micron stock presents potential gains of 60%. The outlook suggests Micron should command a premium valuation due to its exceptional earnings growth, and investors can anticipate even larger gains in 2027 and beyond.
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