Is It Too Late to Buy Micron?
Key Points
Micron Technology is one of three leading memory manufacturers.
Artificial Intelligence has created a shortage of memory hardware and caused Micron and its rivals to surge in price.
Despite that, Micron's price target is still getting upgrades and its PEG ratio still indicates it's undervalued.
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Micron Technology (NASDAQ: MU) has been going ballistic over the past couple of years. It's up 157% year to date and 693% over the past 12 months. So, is it too late to grab a slice of that yourself?
In short, it doesn't look like it.
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Thanks for the memories
Micron makes memory hardware, namely random access memory (RAM) and dynamic random access memory (DRAM).
Those components are required for computers to store and recall information. They are also important for training artificial intelligence (AI) programs to draw inferences from their training data.
Micron's growth has largely been driven by a shortage of memory caused by AI's surging demand for it. Micron is one of only three companies that dominate the memory industry. The other two are Samsung and SK Hynix.
Image source: Getty Images.
The chairman of SK Hynix, Chey Tae-won, believes the memory shortage will last until 2030. Wall Street analysts have Micron's earnings projected to grow enormously through the end of 2027 and remain high through the end of the decade.
And, based on the fact that Micron's current price/earnings-to-growth, or PEG, ratio is 0.75, well below the 1 that indicates a stock is at fair valuation, the stock still has plenty of room to grow.
Analysts at Deutsche Bank have raised the stock's price target to $1,000 and maintained their buy rating. Based on its future earnings projections, Micron is still trading at a bargain price.
So, even with the stock breaking past $800 on May 11 and sitting just below $750 as I write this, there is still plenty of upside left in the memory shortage play.
Should you buy stock in Micron Technology right now?
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James Hires has positions in Micron Technology. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy.
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