Micron Technology (NASDAQ:MU) stock has underperformed the market so far this year. Shares of the company have tumbled big-time in the past few months as doubts about the memory market's health and Wall Street downgrades have knocked the wind out of its sails.

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However, it looks like investors are finally seeing some light at the end of the tunnel as Micron stock has been in resurgent mode over the past few days. The stock has gained just over 5% since Aug. 20, indicating that investor sentiment may be changing for the better. Let's look at the reasons why that may be the case and if Micron stock can finally turn around its fortunes and finish 2021 on a high.

Robust PC, server, and mobile demand will be a tailwind for Micron Technology

Research firm IDC recently reported that global shipments of personal computers (PCs) and tablets will remain strong in 2021. The firm estimates 14.2% growth in PC shipments this year to 347 million units, while tablets are expected to record a 3.4% increase. IDC points out that PC and tablet sales could have grown at a faster pace had there not been a supply shortage.

More importantly, the PC demand environment is expected to remain strong over the long run, with IDC forecasting annual shipment growth of 3.2% through 2025. This paints a bright picture about the future of the PC DRAM (dynamic random access memory) market that accounted for 13% of the overall DRAM space at the end of 2020.

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Similarly, server DRAM demand is likely to remain strong for the remainder of the year and beyond thanks to the launch of new server processors as well as upgrades in data center capacity. According to a third-party estimate, global server shipments are expected to hit 15.7 million units in 2025 from an estimated 12.9 million units this year. More importantly, the rapid deployment of hyperscale data centers to tackle AI (artificial intelligence), 5G, and the Internet of Things (IoT) workloads is expected to drive an increase in server DRAM consumption.

With servers accounting for 34% of the DRAM market, a healthy demand environment in this niche should keep the memory industry's demand-supply balance in Micron's favor. What's more, smartphones account for 40% of the DRAM market, and this segment is in fine form as well thanks to 5G smartphones that are using more memory content as compared to 4G devices.

All of this indicates that the DRAM market could continue to enjoy healthy growth in the long run. This bodes well for Micron Technology, as 73% of its revenue comes from selling DRAM chips.

The NAND flash market has hit a purple patch

Micron gets the remainder of its revenue from the NAND flash business, and the good part is that this business has stepped on the gas. The growing demand for data center storage, consumer solid-state drives (SSDs), and mobile storage has led to a nice bump in NAND flash revenue of late.

Memory market research firm TrendForce points out that NAND flash revenue increased by 10.8% quarter over quarter in Q2. The firm estimates that NAND flash revenue could hit a record high in the current quarter, and it won't be surprising to see the market sustain its impressive growth in the long run thanks to a bunch of catalysts.

For instance, IDC estimates that the global SSD market could hit $51.5 billion in revenue by 2025. Unit shipments are estimated to increase at a compound annual growth rate (CAGR) of 7.8% and revenue is slated to increase at 9.2% a year through the forecast period, which points toward a favorable pricing environment.

On the other hand, the arrival of 5G smartphones is driving an increase in the average NAND flash content per smartphone. Counterpoint Research points out that the average NAND capacity of a smartphone crossed 100 GB last year. The firm adds that the NAND flash consumption of smartphones could jump three times by 2025 as compared to 2021 levels.

So, it is clear that both of Micron's end markets could enjoy secular growth in the future. That's probably why investors on the lookout for a high-growth company trading at an enticing valuation are buying Micron stock. After all, Micron recorded 36% year-over-year revenue growth last quarter to $7.4 billion and is trading at just 20 times trailing earnings, lower than the S&P 500's multiple of 31.

The prospects of the DRAM and NAND markets indicate that it could keep up its impressive growth in the future. Analysts are upbeat about the company as well, with earnings expected to clock a CAGR of over 63% for the next five years. In the end, it is easy to see why Micron stock has regained some ground of late, and don't be surprised to see it head higher in the future.

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.