Roughly three decades ago, the advent and mainstream proliferation of the internet changed the global growth trajectory forever. Since then, investors have waited, often impatiently, for the next technological leap forward to take shape. The evolution of artificial intelligence (AI) is that long-awaited leap.
Enabling software and systems to make autonomous, split-second decisions is a $15.7 trillion global opportunity, according to PwC analysts. But while graphics processing unit (GPU) goliath Nvidia is often viewed as the foundation of the AI infrastructure build-out, it's arguably been dethroned by Micron Technology (MU -1.90%).
Shares of Micron have rallied nearly 700% over the trailing year, and 1,850% since the start of 2023 (i.e., when AI stocks really began to take off). But according to one Wall Street analyst, the good times are just getting started.
Image source: Getty Images.
Micron can vault to a $2.5 trillion valuation
Although Wall Street analysts have been adjusting their price targets on Micron at a breakneck pace this year, few have been tripping over themselves to boost estimates quite like Ben Reitzes at Melius Research.
Over a two-month stretch, Retizes initiated coverage with a $700 price target (April 27), increased his firm's price target to $1,100 (May 18), and doubled it again to $2,200 (June 25). A $2,200 price target implies a nearly $2.5 trillion market cap and upside of 126% from where shares closed on July 2. This would make Micron larger than Taiwan Semiconductor Manufacturing, Space Exploration Technologies (SpaceX), and Broadcom, among others.
NASDAQ: MU
Key Data Points
The overwhelming optimism surrounding Wall Street's newest trillion-dollar company primarily involves its AI ties. Micron is a key supplier, and the sole major U.S.-based manufacturer, of memory solutions (NAND flash, DRAM, and high-bandwidth memory (HBM)) used in AI-accelerated data centers. HBM is stacked with GPUs to facilitate the ultra-fast transfer speeds needed to train large language models and make split-second decisions in AI data centers.
The same week that Reitzes raised Melius Research's price target on Micron to $2,200 is when the company announced it had secured around $100 billion in strategic long-term agreements for memory solutions. With demand for memory solutions handily outstripping supply, Micron is enjoying otherworldly pricing power.
Image source: Getty Images.
When things seem too perfect, they often are
There's little question that Micron is firing on all cylinders at the moment and has been rewarded for doing so. Its long-term agreements and the persistent shortage of physical memory solutions should remove some of the cyclicality that's hampered memory companies for decades.
But 28 years of investing on Wall Street has taught me that when things seem too perfect, they often are.
Although Micron's bottom line is protected from a sales shortfall for the foreseeable future, it's important to recognize that no game-changing technology over the last three decades has escaped an early innings bubble-bursting event.
Stock market bubbles throughout history...
-- Geiger Capital (@Geiger_Capital) May 8, 2026
AI stocks now ~40% of the market. pic.twitter.com/RxSAh09k6F
Stock market bubbles form because investors consistently overestimate the adoption and/or optimization of new technologies. While adoption hasn't been an issue, as evidenced by the demand for Micron's HBM, we're likely several years away from businesses optimizing these solutions to boost sales and profits. Don't forget that it took more than half a decade for businesses to optimize the internet, which occurred after the dot-com bubble burst.
Though Micron's forward price-to-earnings ratio remains fundamentally appealing, historical precedent points to a rough road ahead as AI matures.
