Broadly speaking, investing in semiconductor stocks has been a wise choice over the last year. As artificial intelligence (AI) hyperscalers double down on infrastructure budgets, the need to secure more chips for data centers remains critical.
That said, recent price movements suggest that growth investors aren't just looking at the obvious AI chip stocks anymore. Over the last six months, shares of Nvidia and Advanced Micro Devices have risen by 7% and 16%, respectively.
Beyond GPU stocks, capital inflows appear to be moving toward the memory and storage market. Take Micron Technology (MU 3.21%) as a prime beneficiary -- witnessing a 255% price surge since mid-August.
Let's take a look at the factors driving Micron stock higher and assess whether shares can keep rallying throughout 2026.
Image source: Micron Technology.
How large is the AI memory market?
According to Micron's management, the total addressable market for high-bandwidth memory (HBM) was $35 billion in 2025. However, the market is expected to grow 40% annually through 2028 -- putting the total opportunity on pace to reach $100 billion before the end of the decade.
The AI memory market is highly fragmented, with Micron's primary challenges being just two other major players: Samsung and SK Hynix.
NASDAQ: MU
Key Data Points
What type of growth does Wall Street expect for Micron?
Limited competitive dynamics and a rapidly emerging market size is fueling widespread shortages for dynamic random access memory (DRAM) and NAND solutions. As such, Micron is able to command high degrees of pricing power as big tech races to complement their GPU clusters with adequate HBM architecture.
According to Wall Street's consensus estimates, Micron's revenue is forecast to reach $76 billion in fiscal 2026 -- an increase of 103% year over year. Meanwhile, analysts expect robust strong unit economics to flow to the bottom line as earnings per share (EPS) are expected to quadruple from $7.59 in fiscal 2025 to $33.92 this year.
MU Revenue Estimates for Current Fiscal Year data by YCharts
Where will Micron stock be at the end of 2026?
Even with its massive upward price swing and its robust growth outlook, Micron still trades at a modest forward price-to-earnings (P/E) multiple of 12.3.
For reference, the average forward P/E across the Nasdaq-100 index is 24.5. In addition, other leading AI semiconductor stocks such as Nvidia, AMD, Taiwan Semiconductor Manufacturing, and Broadcom each boast forward earnings multiples in the range of 25 to 37.
If Micron were to be valued at a forward P/E of 20, which is still meaningfully below the broader Nasdaq-100 and adjacent AI chip stocks, shares would be trading closer to $660 -- implying 57% upside from current levels.
While each semiconductor business has a different market size -- and therefore varying growth prospects -- the macro takeaway is that Micron is valued at a considerable discount relative to other leading AI chip players.
For these reasons, I see Micron continuing to experience valuation expansion throughout 2026 as investments in AI infrastructure accelerate and trickle across the broader HBM opportunity.
