Micron Just Became America's 10th-Most-Valuable Company. Wall Street Says It Could Pass Tesla and Meta Next.

Micron Technology (NASDAQ: MU) crossed a milestone on Tuesday that few would have predicted a year ago: a market value north of $1 trillion. Shares of the memory chipmaker jumped about 19% to a record high, lifting the company into 10th place among America's most valuable businesses -- ahead of even Walmart and Eli Lilly.

The spark for the stock's big gain on Tuesday was a bold call from UBS, which tripled its price target on the stock to $1,625. At that level, Micron would be worth roughly $1.8 trillion -- enough to climb past electric-vehicle maker Tesla and Facebook parent Meta Platforms, each worth somewhere around $1.6 trillion as of this writing.

Behind the optimism is a simple idea: artificial intelligence (AI) may have permanently changed Micron's business. For most of its history, the company traded like a classic boom-and-bust commodity producer, with memory prices swinging wildly between shortage and glut. The argument now is that AI demand has rewired those dynamics. Whether that's true -- and whether it justifies leapfrogging two of the market's biggest names -- is worth digging into.

Image source: Getty Images.

Closing in on Tesla and Meta

To reach the neighborhood Tesla and Meta occupy, Micron would need to add more than 50% to a market capitalization that has already soared about 800% over the past year. That's a tall order. But the business underneath the stock has been growing at a pace that makes the idea less far-fetched than it sounds.

In its fiscal second quarter of 2026 (the period ended Feb. 26, 2026), Micron's revenue nearly tripled from a year earlier to $23.86 billion. Just as telling, that was up sharply from $13.64 billion only three months earlier. Most of this growth came from DRAM, the high-speed memory that fills AI servers, with storage chips (NAND) adding to the haul.

What may matter more for the stock's rerating, though, is how Micron is now selling those chips. On the company's fiscal second-quarter earnings call, CEO Sanjay Mehrotra pointed to a new type of multi-year contract built to take some of the guesswork out of the memory cycle.

"We continue to work with customers on strategic customer agreements -- or SCAs -- that are different from prior LTAs (long-term agreements) and have specific commitments over a multi-year time horizon for improved visibility and stability in our business model," Mehrotra said, noting that Micron had signed its first five-year deal of this kind.

That's the crux of the case for a richer valuation. If Micron can secure customer commitments years in advance, investors may be willing to pay the premium typically reserved for steadier businesses rather than the discount usually slapped on cyclical chipmakers. And management seems confident the strength will hold, guiding for fiscal third-quarter revenue of about $33.5 billion -- a figure that exceeds the company's total sales in entire past fiscal years -- and raising the dividend 30%.

Cheap shares, cyclical risk

Despite the enormous run, the stock doesn't look expensive relative to analysts' consensus earnings-per-share forecast over the next 12 months; Micron trades at a forward price-to-earnings ratio in the mid-teens after its stock's recent run-up -- a multiple that would look decent for almost any fast-growing company, let alone one sitting at the center of the AI build-out.

But a cheap-looking valuation can be deceiving here. Memory has always been a deeply cyclical business, and the same forces lifting Micron today -- tight supply and soaring prices -- have a long history of reversing hard once new capacity catches up with demand. And Micron is adding plenty of capacity: management expects capital expenditures to top $25 billion this fiscal year, with another meaningful step up planned for the next as it builds new plants across several countries.

All of that spending is a bet that the AI boom has years left to run. And it may well prove right. But it also means the company's fortunes are tied tightly to a single demand cycle that hasn't yet been tested by a downturn.

Ultimately, after a run like this, investors may want to tread carefully. If the market catches even a hint that AI demand is cooling, sentiment could turn quickly -- and investors could start pricing in the next normalization well before it actually arrives. For a stock that just muscled its way into the country's 10 most valuable companies, that's a risk worth taking seriously.

Daniel Sparks has clients with positions in Tesla. The Motley Fool has positions in and recommends Eli Lilly, Meta Platforms, Micron Technology, Tesla, and Walmart. The Motley Fool has a disclosure policy.