Shares of Micron Technology (MU 3.21%) have rocketed 247% over the last 12 months (as of Jan. 12). Given the quick rise, the stock may appear expensive at these levels, especially when you factor in the historical cyclicality in the memory chip market. But Micron is also potentially tapping into an unprecedented opportunity to supply vast amounts of memory capacity for artificial intelligence (AI).
Image source: Micron Technology.
Why buy Micron stock now
Spending on AI infrastructure is projected to stretch into the trillions over the long term. As AI workloads shift from training to inferencing, where AI can make predictions from new data, this will require substantial growth in high-capacity, fast memory to handle a larger bandwidth of data processing. Micron expects inferencing to eventually comprise 80% of the AI market.
NASDAQ: MU
Key Data Points
Micron is already benefiting from these trends. The stock's performance is supported by strong demand, as revenue jumped 57% year over year in the recent quarter. Analysts project record memory demand and higher selling prices to boost earnings per share, which are expected to soar from $8.29 in fiscal 2025 to $32.30 in fiscal 2026, according to Yahoo! Finance.
The stock's low price-to-earnings multiple reflects historical volatility in the company's earnings from fluctuations in selling prices for memory chips. However, AI may be creating a more sustainable growth path for Micron. The stock could double and still trade at 20 times this year's earnings estimate, which is not expensive for a growth stock.
