An funding of $1,000 made in shares of Micron Technology (NASDAQ:MU) three years in the past is now value nearly $15,000, which is not shocking as the corporate has been benefiting from wholesome reminiscence chip demand that has created a provide scarcity in the trade.
However, Micron stock has been pulling again recently. Investors have been rotating out of reminiscence shares, reserving earnings after a stellar run in this sector in latest months. The excellent news is that Micron’s pullback has opened a possibility for savvy traders to purchase the inventory at a gorgeous valuation.
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If you have $1,000 in investible money proper now, placing that cash into this semiconductor stock could possibly be a worthwhile transfer, as Micron might surge impressively till the tip of the last decade. Let’s take a look at the explanation why.
Image supply: Micron Technology.
The reminiscence increase is not going wherever
Micron Technology launched fiscal 2026 third-quarter outcomes (for the quarter ended May 28) on June 24. The firm’s income elevated by 346% 12 months over 12 months to $41.45 billion. Meanwhile, non-GAAP earnings per share rose greater than 13x 12 months over 12 months to $25.11.
The easiest motive behind this phenomenal surge was the favorable demand-supply setting in reminiscence chips. Artificial intelligence (AI) information facilities devour monumental quantities of compute and storage reminiscence chips to make sure AI workloads run seamlessly. The excellent news for Micron traders is that the provision deficit will not be going away till the tip of the last decade.
Equity analysis supplier Citrini Research (by way of PC Gamer) predicts that the provision deficit in dynamic random-access reminiscence (DRAM) will enhance from the present 18% to almost 25% by 2030. The analysis agency notes that DRAM demand might hit 157.5 exabytes (EB) in 2030, exceeding provide by 28.7 EB. The agency provides that the proliferation of agentic AI and the necessity for high-bandwidth reminiscence (HBM) will probably be key components behind demand exceeding provide.
Citrini’s forecast is in keeping with what reminiscence specialist SK Hynix famous earlier this 12 months. The South Korean big estimates that wafer provide will probably be a minimum of 20% under demand over the subsequent 4 to 5 years.
So, Micron’s largest catalyst — larger reminiscence costs — appears sustainable till the tip of the last decade. Importantly, Micron has entered into multi-year agreements with prospects to capitalize on the rising reminiscence demand. The firm reported having 16 strategic buyer agreements (SCAs) on the finish of fiscal Q3, unfold throughout the information heart, automotive, and shopper finish markets.
Management notes that these SCAs sometimes have a five-year time period, working till the tip of 2030. Meanwhile, the automotive agreements have a three-year time period. Micron says that it’s going to promote 20% of its DRAM quantity and one-third of its NAND flash quantity by means of these SCAs. An vital level to notice is that 14 of those SCAs will generate a minimum of $100 billion in income for Micron over the rest of the settlement interval.
Given that Micron nonetheless has capability to promote even after signing these SCAs, it’s well-positioned to seize the secular development of the reminiscence market. Not surprisingly, analysts are bullish about Micron’s development prospects, anticipating its high line to greater than double in simply two fiscal years.
Micron could make traders considerably richer by the tip of the last decade
Micron’s fiscal 12 months 2026 will finish this month. The firm’s earnings are anticipated to leap by a whopping 785% in the fiscal 12 months to $73.40 per share. Importantly, consensus estimates undertaking a good leap in Micron’s earnings in fiscal years 2027 and 2028.
We have already seen that the favorable pricing setting will proceed till the tip of the last decade. So, I will not be shocked to see Micron clocking double-digit earnings development in fiscal 2029 and financial 2030. Assuming its backside line grows at even 10% yearly in these two years, its earnings per share might attain $206.55 in 2030.
Micron trades at 6 instances ahead earnings. That’s nicely above the S&P 500 index’s ahead earnings a number of of 21. Assuming Micron trades at even 15 instances earnings in 2030 and achieves $206.55 in earnings per share, its inventory worth might leap to $3,098. That’s nearly 3.4x its present inventory worth.
So, an funding of $1,000 in this AI inventory could possibly be value greater than $3,000 by 2030, which is why traders can think about shopping for Micron earlier than it steps on the gasoline as soon as once more.
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Harsh Chauhan has no place in any of the shares talked about. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy.
