Skyrocketing demand for memory chips has made Micron Technology (MU 3.18%) one of the market's top performers in recent months. An investment of $10,000 in shares of Micron made just two years ago would now be worth nearly $52,000.
It is easy to see why Micron stock has become a multibagger so quickly. Due to the massive buildout of artificial intelligence (AI) data centers, demand for the types of memory it manufactures is well exceeding supply, which has led to a sharp jump in prices. The good news for Micron investors is that these favorable dynamics for suppliers in the memory market are here to stay for at least the next few years. Does that mean it would be a good idea to put $10,000 into this stock in the hope of turning it into $1 million?
Let's find out.
Image source: Micron Technology.
Micron Technology stock is poised for remarkable gains in the long run
For a $10,000 investment in Micron to turn into $1 million, the stock will need to jump 100-fold from its current levels. Micron has a market cap of $463 billion. A 100-fold increase in that figure seems absurd to imagine, as it would bring its market cap to around $46 trillion, which would be about 40% of the world's 2025 gross domestic product.
NASDAQ: MU
Key Data Points
However, adding Micron to a diversified portfolio could indeed help investors become millionaires. That's because it still has a lot of upside to offer even after the stunning gains it has recorded recently. AI-fueled demand is likely to keep memory prices higher through 2028, especially given that memory manufacturers are being prudent with their capacity expansion plans and focusing on higher profits.
Even though the three biggest memory manufacturers are building factories to meet the rising demand from data centers, smartphones, and computers, their new fabrication facilities won't start producing chips anytime soon. All this explains why market research firm TrendForce expects the memory market's revenue to jump to a whopping $552 billion in 2026 from $235 billion last year.
The firm anticipates another big jump in 2027 to almost $843 billion in revenue. As such, Micron stock is an obvious buy right now, as it is well positioned to capture a large slice of the massive incremental growth opportunity on offer. The company's share of the fast-growing dynamic random-access memory (DRAM) market has been increasing, putting it in a solid position to sustain its impressive growth in revenue and earnings.
The stock can still become a multibagger
According to consensus estimates, Micron's earnings could quadruple in the current fiscal year to $33.73 per share. The forecasts for the next couple of years suggest that the earnings growth rate will cool down in the wake of that leap.
MU EPS Estimates for Current Fiscal Year data by YCharts.
But it may not moderate as forecast due to the insatiable demand for AI-capable servers, which is gobbling up the world's memory supply. Chip designer AMD expects the data center AI chip market to grow to a whopping $1 trillion by 2030. As these processors must also be equipped with memory manufactured by Micron and others, there is a good chance the company will sustain its terrific momentum.
Moreover, Micron is trading at just 13 times forward earnings right now. If it trades in line with the tech-focused Nasdaq-100 index's forward earnings of 25, the stock could multiply from its current levels, given its earnings growth potential.
All of this makes Micron a no-brainer AI stock to buy right now, especially if you're looking to grow a million-dollar portfolio.
