It took some grit and patience, but holding onto shares of Micron Technology (NASDAQ:MU) paid off last year. The stock closed out 2020 40% higher, and that momentum is carrying into 2021 after the company's fiscal 2021 first-quarter report. After a two-year slump, the semiconductor company is back to making new all-time highs. 

Micron's immediate outlook for sales of its memory chips looks promising, and shares are more affordable than they appear at first glance. This is one of my favorite ways to play multiple technology growth trends like 5G, AI, and auto tech as the world goes digital.

Not a bad way to start a year

Micron kicked off its new year with another solid report card, showing further improvements in demand for memory chips after the cyclical slump that started back in 2018. Such is the way of manufacturing firms, even ones dealing in high-tech components. But the new Micron that walks away from low-profit-margin deals and focuses on advancing memory technology for applications like 5G mobile networks, AI, and data centers is in better shape than ever. 

MU Revenue (TTM) Chart

Data by YCharts.

Specifically, the company reported a 12% year-over-year advance in sales to $5.77 billion, and adjusted earnings per share surged 63% higher as profit margins rallied with sturdier demand. Free cash flow did swing to negative $771 million during the period due to higher investment spending on property and equipment, but this metric should smooth out and return to positive territory as the year progresses. 

As for outlook, Micron expects Q2 revenue and adjusted earnings per share to increase 21% and 67% year-over-year, respectively, at the midpoint of guidance. Given how rapidly the bottom line is rebounding, Micron stock trading for about 26 times trailing 12-month adjusted earnings is still a reasonable price tag in my book.

Pictures of various digital devices and services, illustrating digital data.

Image source: Getty Images.

5G, data centers, and a data-hungry world

The current uptrend for Micron could have legs. Cloud computing demand is putting new stress on data centers and kicking off an upgrade cycle in that department. New consumer hardware is also rolling out, from smartphones that can connect to 5G mobile networks to graphics processors for next-gen video game graphics. Both of those applications are data-hungry and in demand right now, especially the latter, with new video game consoles from Microsoft and Sony now available.

Infrastructure to support mobile 5G networks themselves is also data-hungry, and in the early innings of construction. Hardware-enabling AI software, driver-assist and autonomy features in vehicles, and renewable energy projects and supporting energy grid updates will also need digital memory built in. Some of these markets like auto sales -- including the dozens of new electric vehicle models -- are in store for a big rally as effects of the pandemic slowly wear off. 

Put simply, the world is growing increasingly dependent on digital data, and it all needs to be stored somewhere. That's why Micron is one of my favorite broad-based manufacturing and tech plays on an increasingly digital world. Whatever the application, Micron will have the opportunity to supply necessary parts to make it all possible. Don't get me wrong, this will continue to be a cyclical business -- at some point in the future, the current uptrend that's just getting rolling will break down. But rallying demand for memory chips as the global economy normalizes and prepares for a new wave of technology makes this look like one affordable semiconductor stock. After providing lackluster returns since the end of the last boom-time in 2018, I expect Micron to continue its momentum in the new year.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.