Investing in Micron (MU +1.34%) one year ago would have turned $1,000 into $6,690 by now. When those types of returns happen, some investors may believe they've missed out on the opportunity, but Micron is still in a position to mint new millionaires.
While a 10x return is a tough ask for a $1 trillion company, it's feasible for this chipmaker to continue outperforming the S&P 500.
Image source: Getty Images.
Micron's financial performance justifies the soaring stock price
Micron isn't a hype stock. Fundamentals are driving the rally that has resulted in the chipmaker crushing the S&P 500 over the past year. Revenue more than quadrupled year over year in the company's fiscal 2026 third quarter, and its net profit margin soared to 68%.
NASDAQ: MU
Key Data Points
That growth rate actually surpasses Micron's 280% year-to-date stock gains. As long as a company's revenue and net income outpace its year-to-date share price gains, its stock should have more room to rally, especially if it trades at a reasonable valuation.
That's most certainly the case for Micron. The stock trades at a forward P/E ratio of only 7. Not only does it have a lower valuation than most tech stocks, but it also has a lower valuation than most financial stocks -- unusual for a hypergrowth tech company.
Micron anticipates multiyear growth
Earlier in the year, investors grew concerned that chipmakers' share prices would eventually correct sharply as artificial intelligence (AI) demand slowed down. Chipmakers have long been cyclical businesses, and memory-chip makers in particular, but the numerous multiyear customer deals that Micron and its peers have signed recently have completely changed that narrative.
Micron CEO Sanjay Mehrotra said that these agreements will "significantly enhance the durability and predictability" of Micron's financial performance.
The chipmaker also anticipates $50 billion in fiscal 2026 fourth-quarter revenue at the midpoint of its guidance range. That implies a 21% sequential growth rate -- after revenue more than quadrupled year over year in the prior quarter.
Investors will discover how accurate that guidance was when Micron reports its fiscal Q4 earnings on Sept. 30.
The company previously had guided for $33.5 billion in fiscal third-quarter revenue, but smashed that forecast by delivering $41.46 billion in sales. A similar beat to wrap up Micron's fiscal 2026 might trigger another rally and help the stock reclaim the all-time high it touched in June.
Multiyear tailwinds from the AI build-out position Micron for market-beating returns. It has already sold all of the memory chips that it will be able to produce through 2027, giving it immense pricing power for future supply. That same backlog ensures the memory chip shortage will persist in the years ahead, much to the benefit of Micron investors.
