Shares of Micron Technology (MU 3.21%) stock have roared incredibly higher in the past year, rising a stunning 247% as of this writing. The memory specialist started 2026 on an auspicious note, jumping more than 10.5% on Jan. 2. Let's see why that was the case and find out why this semiconductor stock is poised to deliver phenomenal gains to investors in the new year.
Image source: Micron Technology.
Micron Technology has shot up thanks to positive analyst coverage
Micron's latest jump is the result of positive coverage by Bernstein SocGen Group analyst Mark Li. The analyst has increased his Micron price target to $330 from the prior reading of $270, rating the stock at "outperform."
NASDAQ: MU
Key Data Points
Li's upgrade is based on the favorable demand-supply dynamics in the memory market. The prices of memory chips such as dynamic random-access memory (DRAM) and NAND flash storage have been rising in recent quarters. Manufacturers like Micron have been unable to produce enough chips to meet the end-market demand from data centers, which need huge amounts of compute and storage memory to process AI workloads.
The supply shortage has led to a spike in prices, with the Bernstein analyst forecasting a 20% to 25% sequential jump in the price of DRAM in the current quarter. Micron's guidance for the ongoing second quarter of fiscal 2026 explains Li's bullishness. The company anticipates non-GAAP earnings to jump by a whopping 440% year over year in the current quarter (which will end in February) to $8.42 per share.
That's significantly higher than the 167% year-over-year growth in earnings than Micron clocked in the previous quarter. Even better, Li estimates that DRAM prices are on track to continue improving throughout the year, indicating that Micron could sustain terrific bottom-line growth going forward.
One concern that may weigh on investors' minds is whether Micron is able to live up to its lofty outlook. However, the company has sold out its available capacity of the high-bandwidth memory (HBM) chips that are used in AI data center chips. Responding to an analyst query on the December 2025 earnings call, Micron CEO Sanjay Mehrotra remarked:
In our prepared remarks that our HBM for 2026 is sold out in terms of volume and our negotiations with customers have been completed for calendar year 2026 for volume as well as pricing.
He added that the non-HBM business is also experiencing healthy profitability. That's not surprising as there is a shortage of memory chips that go into smartphones and personal computers (PCs) since memory manufacturers are allocating more capacity toward HBM. Even then, Micron points out that it will be able to meet only half to two-thirds of the demand from several key customers in the medium term.
Another important point worth noting is that Micron is negotiating multi-year contracts with several key customers for both DRAM and NAND flash storage chips. The company points out that these contracts have a stronger structure, suggesting that it could be negotiating them on favorable margin terms that should ensure terrific bottom-line growth in the coming years.
Here's why the stock could triple in 2026
Consensus estimates are projecting Micron's earnings to land at $32.22 per share in the current fiscal year (which will end in August 2026), an increase of almost 4 times from the previous year. It earned $4.78 per share in fiscal Q1, which means that it is likely to register non-GAAP earnings of $27.44 per share over the next three quarters.
Micron's fiscal 2027 earnings estimate stands at $39.39 per share. Assuming that's spread evenly throughout the four quarters of the next fiscal year, it could clock $9.85 per share in earnings in the first quarter of fiscal 2027 (which will end in November 2026). Adding that figure to the potential earnings it is likely to register in the remaining three quarters of the current fiscal year suggests that its bottom line could land at $37.29 per share over the next four quarters (which roughly coincide with calendar 2026).
Multiplying the projected earnings by the tech-laden Nasdaq-100 index's forward earnings multiple of 26 points toward a stock price of $969 by the end of the year, which is just over triple its current stock price. Micron stock is trading at just 9 times forward earnings right now, and the remarkable earnings growth that it is likely to deliver is a solid reason why it could be trading in line with the Nasdaq-100's average going forward.
So, investors looking to buy a top AI stock trading at a cheap valuation that's capable of flying substantially higher should take a closer look at Micron before it jumps.
