Key Points
Micron is experiencing a general surge in demand for its memory products.
The stock looks cheap, but there may be a good reason for that.
Micron (NASDAQ: MU) has been an incredible performer in 2026, rising by over 200% so far this year. But that could just be the beginning. Micron's stock still looks cheap and could surge to a new high as we progress through the rest of 2026 and into 2027. In fact, I wouldn't be surprised if Micron shares -- which closed trading Monday at $958.73 -- reach over $3,000 by the end of 2027.
That would be a major move, but when you look at the math behind the premise, it makes sense.
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The memory chip market shows no signs of calming
Micron makes both NAND and DRAM memory, and supplies of both are well below demand due to the AI build-out eating up so much of what the memory-chip foundries can produce. This has caused prices for memory to surge, and Micron is benefiting from it big time. Its upward revenue trend over the past year is astounding, trouncing any demand wave it has seen before.
MU Revenue (Quarterly) data by YCharts.
It's not done, either. For its fiscal 2026 fourth quarter (which ends Sept. 3), Micron is guiding for $50 billion in revenue.
However, investors should take that figure with a grain of salt, because Micron has been massively outperforming projections. Wall Street analysts expect this strength to carry over into the new fiscal year, with 85% revenue growth expected. On top of that, they project $155 in earnings per share.
Currently, Micron trades at 21 times earnings, a fairly normal valuation for it, aside from the spikes it experiences during demand downturns.
MU PE Ratio data by YCharts.
If Micron only hits Wall Street's expectations (even though it has commonly outperformed them in recent quarters), at a 21-times-earnings valuation, the stock would be priced at $3,255 per share. That's well over a triple in just a year, making it a no-brainer investment.
However, there's one caveat.
The memory chip market has historically been highly cyclical, going through alternating phases of high and low demand relative to production capacity. The current boom is the biggest one Micron or any of its peers have ever seen. If it lasts for a few more years, Micron could be worth the investment. However, if the memory market's supply-and-demand imbalance starts to be relieved following fiscal 2027, then Micron stock could be in trouble.
It's up to investors to decide how long they believe the memory chip shortage will last, as memory market conditions will dictate where Micron's stock actually goes by the end of 2027. If the shortage lasts into late 2028, early 2029, or beyond, this stock price projection could be accurate. If memory supplies loosen up in 2028, Micron's earnings and its earnings multiple might come up short of what would be required for this price projection to pan out.
Keithen Drury has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy.