Micron Technology (MU 5.55%) is seeing strong demand for its memory and storage solutions, as data centers continue to optimize their systems for artificial intelligence (AI) workloads. This has caught the attention of some investors and pushed up the stock price (although it's been a volatile ride). An investor who bought $1,000 worth of stock a year ago would currently have an investment valued at roughly $2,512.
If you're considering buying the stock now, let's examine what to expect from Micron's business in 2026 and where the stock is likely to trade in the next 12 months.
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Micron's momentum is expected to continue
Sales to data centers are exploding, contributing to a 46% year-over-year increase in revenue in the recent quarter. A strong demand environment also benefits selling prices, which, in turn, lifts its gross margin. Micron's earnings per share increased 258% over the year-ago quarter.
Capital spending on AI in the data center market is expected to exceed $400 billion by 2025. This is creating a tight demand/supply market for memory. While competition in the memory market can lead to downward pressure on selling prices, management expects another solid year in calendar 2026, as it anticipates finalizing agreements to sell its remaining high-bandwidth memory supply in the coming months.
NASDAQ: MU
Key Data Points
Analysts expect earnings to reach $16.79 in fiscal 2026 (which ends in August) before increasing to $18.70 the following year. Assuming the stock trades at the same forward price-to-earnings multiple of approximately 15 this time next year, the stock would still trade around $280, implying upside of 14% over the current share price of $245.
I wouldn't buy the stock expecting it to double again, as there are numerous uncertainties about market sentiment that can impact valuations. However, this is a stock worth considering on dips, as the long-term outlook for growth in AI infrastructure provides significant growth opportunities for Micron.
