Tech stocks sometimes appear expensive in the near-term, but no sector has the potential for explosive, multibagger returns than the technology sector.
Look no further than memory giant Micron Technology (MU 3.21%), long considered a cyclical "commodity" in the tech world, but which has really come into its own in the age of AI.
NASDAQ: MU
Key Data Points
Up 372% in five years
Since Feb. 10, 2021, Micron's stock has appreciated roughly 372%, including dividends. That means $100 invested in Micron stock five years ago would be worth a whopping $472 today. That's a 36.3% annualized return -- a stunning result compared with the 8% and 10% average annual return of the stock market.
Micron was actually trading at a near-term top five years ago, only to crash in 2022 when the pandemic ended, interest rates rose quickly, and the PC, phone, and cloud server end markets ground to a halt.
However, the artificial intelligence revolution helped Micron not only recover but grow multiples past previous highs. AI training requires a particular type of DRAM called high-bandwidth memory (HBM). That market is projected to grow to $100 billion by 2028, according to Micron management, a figure that's larger than the entire DRAM industry was five years ago!
Not only that, but HBM requires three to four times the equipment to produce as traditional DRAM. Therefore, not only is demand booming, but HBM also sucks up supply.
No wonder that has led to a persistent shortage. Analysts project DRAM prices to increase over 90% just in the first quarter 2026, with another 20% price increase projected in Q2.
Image source: Getty Images.
A boom that will lead to a bust, or a "new normal"?
It remains to be seen whether the memory industry will eventually have a severe "bust" after today's unprecedented boom, or whether we are now in a "new era" of sustainable memory prices and profits.
Only time will tell, but here's an astounding stat: Analysts project Micron to earn $33.51 in 2026 and $42.97 in 2027 on average. That $76.50 of earnings in just two years would nearly total Micron's February 2021 stock price, which was around $90 at the time.
