Micron Stock Is Down 33% From Its High. History Suggests a $5,000 Investment Now Will Be Worth This Much by 2028.

Micron (NASDAQ: MU) stock has had a tremendous 2026. It's the fourth-best-performing stock in the S&P 500 (SNPINDEX: ^GSPC) this year, and has risen by more than 184%. However, it was doing far better before a sell-off dragged its stock price down, as it now sits 33% below its all-time high.

That steep dip has many investors concerned. However, I think history points in a different direction for the company. Micron could have another monster performance next year, and could be a great stock to own in both 2027 and 2028. If that proves to be the case, now would be the perfect time to load up on the stock.

Image source: The Motley Fool.

Micron's business is booming

Micron is one of the leaders in the memory chip industry, and makes both NAND and DRAM memory. Each is in short supply, and Micron told investors that the supply constraints in the memory industry will be worse in 2027 and 2028 than they were in 2026. That's a huge deal, especially because Micron plans to bring several new production facilities online in the next couple of years -- and so do its peers.

Another key competitor in the industry, SK Hynix, told investors that it was sold out of all the memory it will be able to produce through 2029. This shows just how dire the shortage is, and that situation will keep memory prices elevated for many years.

However, the market is pricing Micron's stock like its business will collapse tomorrow. The memory chip industry has historically been highly cyclical, as those products are essentially commodities, with prices dictated largely by supply-and-demand dynamics. Because of this, Micron stock naturally trades at a discount relative to tech businesses with more stable revenues and earnings. However, today's discount is unlike the ones it carried in most prior periods.

Over the past two decades, Micron's price-to-earnings ratio has averaged about 20. Today, it's less than 10.

MU PE Ratio data by YCharts.

While Micron has traded at lower valuation levels at times, those drops directly preceded significant declines in earnings. But I expect that it will be several years or more before the next earnings slump for Micron arrives, as the AI industry is expected to stay strong through at least 2030. Additionally, Micron is reshaping its business model, requiring its clients to enter into multiyear contract agreements with it that set floors and ceilings on chip prices. This will cushion it from the impact of the next demand slowdown when it eventually comes, and make the business more sustainable during the down phase of the cycle than it was in previous ones.

Micron's stock could triple without looking expensive

If we value Micron stock relative to its fiscal 2028 earnings projections, its forward P/E valuation plummets to just 3.9.

MU PE Ratio (Forward 1y) data by YCharts

So, what does that indicate? If Micron were to hit all analyst projections and maintain its current 10 times earnings valuation, the stock could rise by more than 150% through 2028. It would turn a $5,000 investment made now into a position worth about $12,800. That's a great return in a short time frame, and one that many investors would love to have.

But even a P/E of 10 would be pretty cheap compared to Micron's average historical valuation. As a result, I think Micron is a great stock to load up on here. The market is betting that AI spending will contract quickly, but that's not what any of the companies doing the spending are saying. Investors should use this mismatch to their advantage and scoop up one of the cheapest AI stocks with the most upside before the market comes to its senses.

If you invest in Micron, keep tabs on general AI spending. If you start to see trends of it going down, the memory company's business could be in trouble. However, that may not happen for many years, and there's plenty of time for Micron to deliver strong returns. I think Micron is one of the best AI stocks to buy now, and investors should take advantage.

Keithen Drury has positions in Micron Technology. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy.