Micron (MU +2.42%) has been an incredible stock to own in 2026, as it's up by around 225% this year. Just because it has done so well already, though, doesn't mean it isn't primed for more upside, and one billionaire investor recently bought more shares of it.
During the second quarter, billionaire Phillippe Laffont, who runs investment management firm Coatue Management, massively increased its Micron stake. As of the end of Q1, it held around 166,000 Micron shares. As of June 30, it held 3.1 million. That's a huge jump in a short time frame, but after looking at Micron's potential, I think it makes perfect sense.
Micron is down over 20% from the all-time high it hit in June, and I think now could be the perfect time to load up on shares, as a rally could be imminent.
Image source: The Motley Fool.
Micron isn't being respected for its growth potential
Micron makes memory chips, which are in short supply because the artificial intelligence build-out is consuming the majority of what producers can manufacture. Every memory-chip maker is more than sold out well in advance of production, which has caused prices for memory to skyrocket. Little has changed when it comes to their input costs, so this price growth is creating pure profit for Micron.
NASDAQ: MU
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The biggest question investors have to ask is how long these conditions will last. Micron is building several new production facilities to increase its manufacturing capacity (as are its peers), but those won't be done until mid-2027 or later. That leaves plenty of time for Micron to benefit from soaring memory chip prices.
Furthermore, Micron's management team projects that tightness in the memory chip market won't ease until 2028 at the earliest, so there could be further price hikes before there's any relief for buyers.
That bodes well for Micron, and its incredible results could continue.
In its fiscal 2026 Q3, which ended May 28, its revenue rose an astonishing 346% year over year. For fiscal Q4, Wall Street analysts expect 348% growth, but confidence in that projection is likely low given the volatility in the memory chip industry. Despite those impressive results and strong projections, Micron's stock is still trading at a cheap valuation of 6 times its fiscal 2027 earnings estimates.
MU PE Ratio (Forward 1y) data by YCharts.
If it could rise to a merely market-average valuation of around 20 times earnings, it would deliver a huge return to investors in a short time frame. However, the current discount reflects the market's worry about what comes next for Micron.
Today, demand for memory chips is the strongest the world has ever seen. But memory has historically been a highly cyclical market, with prices rising and falling based on shifting supply-and-demand dynamics. The peaks are great, but the valleys are tough, and the stock's discounted valuation reflects market concern about what will happen to Micron once the shortage is resolved.
However, it could still take years for supply to catch back up to demand, and I think Micron could still be a solid investment in the meantime, but investors will need to keep this one on a short leash.
