History Says Micron Stock Gains 28% During the Fourth Quarter. Here's Why I Think Shares Will Surge Even More Before 2026 Is Over.

Insatiable demand for artificial intelligence (AI) infrastructure has been a generational catalyst for memory specialist Micron Technology (NASDAQ: MU). After an extraordinary rally earlier this year, investors may be wondering where the stock is headed next.

Between 2020 and 2025, Micron stock generated an average gain of 28% during the calendar fourth quarter. So far this year, the story has looked different. After closing September at $1,065, Micron stock has fallen roughly 17% through Oct. 16.

Nevertheless, I see two upcoming catalysts that could help reverse sentiment and send Micron shares soaring before 2027 arrives.

Image source: Micron Technology.

Earnings season could ignite enthusiasm for memory stocks

Over the next several weeks, investors will hear from some of the world's largest AI companies. Space Exploration Technologies reports third-quarter earnings on Oct. 20, followed by Tesla and Meta Platforms on Oct. 21. Microsoft, Alphabet, Amazon, Apple, and Nvidia are also scheduled to report earnings throughout the remainder of October and November.

These earnings reports could be especially important for Micron because each of these companies is spending hundreds of billions of dollars building AI data centers, and they are increasingly discussing the same bottleneck: memory supply.

During SpaceX's second-quarter earnings call, Elon Musk said memory was the limiting factor for AI development. He implied that memory production was growing 20% annually while demand was increasing much faster, around 200%. His outlook was straightforward: "Economics 101 would suggest that the price increases."

Musk has also publicly praised Micron for being reasonable about memory prices, suggesting that the company's approach will strengthen customer relationships.

Meanwhile, Apple's former CEO Tim Cook touched on memory costs during the company's July earnings call. Cook characterized the situation as a "hundred-year flood," explaining why Apple decided to raise prices on certain products.

These comments are important because they illustrate how memory shortages aren't limited to data centers. Demand for high bandwidth memory (HBM) and advanced DRAM also affects consumer electronics, autonomous systems, and other end-markets.

As big tech companies continue discussing their capital expenditure (capex) plans, investors will likely receive additional evidence that memory supply remains tight. For Micron, that could reinforce expectations for higher average selling prices and stronger profitability heading into next year.

Micron's $35 billion stock buyback is another catalyst

On Oct. 8, Micron's board increased the company's share repurchase authorization to $35.16 billion. The timing of this announcement was particularly interesting. During Micron's most recent earnings call, CFO Mark Murphy explained that the company will increase capital returns beginning Dec. 9, subject to restrictions associated with CHIPS Act funding agreements.

When a company repurchases stock, it reduces the number of outstanding shares. That means future earnings are divided among fewer shares, potentially increasing earnings per share (EPS) even without additional profit growth.

Considering Micron is already witnessing record earnings momentum, stock buybacks should provide another tailwind. If the company begins repurchasing shares while its valuation remains depressed, the new authorization could prove especially lucrative for long-term investors.

Should you buy Micron stock before 2027?

The most compelling part of Micron's investment thesis revolves around valuation. Wall Street's fiscal 2027 earnings estimates currently sit around $176 per share. With Micron trading around $911, that implies a forward price-to-earnings (P/E) ratio of roughly 5.2. That's a reasonable multiple for a company benefiting from one of the AI industry's biggest investment cycles.

Of course, there are reasons for investors to be cautious. Memory is notoriously cyclical. If manufacturers expand production too aggressively, prices could eventually decline. Moreover, rising competition from China's ChangXin Memory Technologies (CXMT) also presents a longer-term risk.

Nevertheless, Micron's near-term fundamentals are compelling. The company has secured numerous long-term strategic customer agreements that cover a substantial portion of its expected fiscal 2027 production, which provides greater visibility into future demand.

When combined with favorable industry conditions and Micron's expanded buyback authorization, the bull case becomes clear. Investors could see rising earnings, a shrinking share count, and potentially an expanding valuation multiple if confidence in the memory industry's outlook improves.

In turn, Micron stock could witness substantial stock-price appreciation sooner than most investors anticipate. In my view, Micron's recent sell-off presents an attractive entry point ahead of 2027. With shares trading at a reasonable valuation, I see Micron stock as a rock-solid buy for long-term investors.

Adam Spatacco has positions in Alphabet, Amazon, Microsoft, Nvidia, and Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Micron Technology, Microsoft, Nvidia, and Tesla. The Motley Fool has a disclosure policy.