Micron (MU -1.25%) has more than tripled this year, and the memory chipmaker actually has a real shot at doubling again in 2027. That would give the stock a $2 trillion market cap and see it approach $2,000 per share.
Micron's ability to reach that valuation depends on the AI boom maintaining its momentum. That seems likely, and there are other factors at play that apply exclusively to Micron.
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Micron's fundamental growth is outpacing its stock gains
Investors have to look at a company's fundamentals to determine if a rally is justified or excessive. Some stocks are due for corrections after a 5% rally, while other stocks are still undervalued after more than doubling.
Micron fits in the latter category. It is up by a little more than 200% this year, but it delivered 346% year-over-year revenue growth in its fiscal 2026 third quarter. Net income also grew by more than 1,000% year-over-year.
Those growth rates support Micron's rally. Furthermore, Micron only trades at a 6 forward P/E ratio. That's a much lower valuation than the majority of tech stocks and the S&P 500.
Multi-year deals solidify revenue visibility
One of the main issues with memory chipmakers is that their revenue is cyclical. Supply shortages cause companies to increase production. Then, demand dries up, and the same semiconductor companies suddenly have massive inventory gluts that require selling at lower prices and dealing with low margins.
Some investors have feared that when the AI trade slows down, Micron will be stuck with a bunch of chips that it can't sell unless it reduces prices sharply. However, this scenario has become increasingly less likely.
Micron announced that it has secured multi-year strategic customer agreements with top customers. These deals provide more revenue visibility and make the company less susceptible to a cyclical downturn.
These deals aren't just about preserving existing revenue. They are also extending Micron's growth rates. For instance, the company told investors to expect $50 billion when it reports its fiscal 2026 fourth quarter results. Micron crushed guidance when reporting $41.46 billion in its fiscal 2026 third quarter, and now it's implying more than 20% sequential growth.
NASDAQ: MU
Key Data Points
Memory chip demand should heat up during the physical AI rollout
The companies that are investing heavily in memory chips are already seeing more growth. Salesforce (CRM +3.24%) reported that its AgentForce ARR more than tripled year-over-year, contributing to 14% year-over-year sales growth in its fiscal 2027 second quarter.
Salesforce uses cloud computing providers like Amazon Web Services for its platform. Those cloud companies are heavily buying memory chips, and as Salesforce sees more annual recurring revenue growth for its AI segment, its cloud costs should also go up. That development would further boost the demand for Micron's memory chips.
However, it isn't just AI agents and models that need memory chips. Micron is currently working with a robotaxi customer, which can open the door to more opportunities like that in the future. Elon Musk, who is trying to make Optimus humanoid robots mainstream, referred to memory as the biggest bottleneck in AI.
Nvidia (NVDA -3.25%) CEO Jensen Huang told investors that physical AI is "coming online" in the company's fiscal 2027 second-quarter press release. Those results included revenue more than doubling year-over-year, breezing past prior guidance. Nvidia is anticipating a mind-boggling $108 billion in fiscal 2027 third-quarter revenue, which represents a 12% sequential growth rate.
Humanoid robots and autonomous vehicles are two physical AI products that should become mainstream within a few years and dramatically boost the demand for memory chips.
These long-term catalysts, combined with immediate financial successes, suggest that Micron stock can double yet again in 2027. It's all about soaring earnings, not expanding multiples.
