Is It Too Late to Buy Micron Stock?

Few stocks have had a better one-year performance than Micron Technology (NASDAQ: MU). If you were smart (or lucky) enough to invest $10,000 into Micron's stock one year ago, that's now worth around $75,000. With a run like that, it would be logical to question whether it can continue.

So, is Micron's rally over? Or does it have a lot further to go?

Image source: Getty Images.

Micron's rally has come from factors out of its control

Micron makes memory chips, which go in nearly every electronic device. Lately, the biggest consumer of memory chip capacity has been artificial intelligence, which has eaten up nearly all available memory production capacity, causing memory prices to spike across the board.

It's a matter of simple economics: Demand is high and supply is low. With memory prices spiking, Micron can charge a premium for its product, which has caused its revenue to soar. Before the end of 2025, Micron's typical quarterly revenue was anywhere from $4 billion to $8 billion. In its most recent quarter, it was nearly $24 billion.

MU Revenue (Quarterly) data by YCharts

For next quarter, management projects about $33.5 billion in revenue. Nothing has changed in Micron's core business; it's just that the price of the product it sells has skyrocketed. This translates into soaring profits for Micron as well.

MU Profit Margin (Quarterly) data by YCharts

With rising prices and a lack of supply, Micron and its peers are racing to build production facilities to meet demand. If the market is flooded with new supply, the price of memory chips could collapse and ruin the economics of Micron's business.

However, Micron projects that the total addressable market for high-bandwidth memory will increase from $35 billion in 2025 to $100 billion by 2028. That's triple today's level, so it's pretty clear that even if Micron and its peers triple production capacity, demand could remain elevated.

That bodes well for Micron's future, and may project that it's not too late to buy the stock. From another standpoint, Micron's stock still looks cheap.

MU PE Ratio (Forward) data by YCharts

Micron stock trades for about 12 times forward earnings, which is far cheaper than your average AI stock. However, its cheap stock price stems from the cyclical nature of the memory chip industry, and some skeptics will always be there surrounding the longevity of memory chip demand.

If you missed out on Micron and are bullish on AI spending prospects, it could still be a solid buy today. However, you must keep an eye on it, because if demand for memory chips starts to fall or production is increased enough to stabilize the price, the stock could quickly sell off.

Keithen Drury has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy.