Is Micron Technology Stock Destined to Join the Trillion-Dollar Club This Year?

Shares of Micron Technology (NASDAQ: MU) have been surging in the past year, and the company, which sells memory and storage products, has a valuation that may still not look all that expensive given ongoing product shortages. Memory is in high demand, and that has enabled the business to generate robust results, with not only sales volumes rising significantly but Micron being able to raise prices.

The net effect has been a business that's been growing at a fast rate on both its top and bottom lines. And when that happens, its valuation can still appear modest, potentially convincing investors that it's still a good buy, with even more upside. Today, the stock is sitting on gains of nearly 700% over the past 12 months, and its market cap is just under $850 billion. With strong quarterly results still likely ahead for the company this year, is it inevitable that Micron Technology joins the trillion-dollar club in 2026?

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Why investors still believe the stock looks cheap

Micron Technology stock, despite its impressive gains over the past year, trades at a seemingly modest price-to-earnings multiple of 35. I say modest because after such a significant run-up in value, you might expect its valuation to be a whole lot higher than that. Many top growth stocks can trade at P/E multiples in excess of 30, and investors may not bat an eye.

When you look at its forward P/E, however, which is based on analyst expectations of its growth for the year ahead, then that's when you might really believe the stock is cheap. Micron trades at a forward P/E of less than eight. And its price-to-earnings-growth (PEG) multiple is less than 0.30; anything below 1.0 would normally be considered a bargain.

At these kinds of multiples, it's easy to see why investors remain incredibly bullish on the stock.

Getting to $1 trillion may be probable, but staying there will be the ultimate test

It may appear to be a forgone conclusion that Micron will at some point reach $1 trillion in market cap this year; its stock would only need to rise another 18% to reach that milestone. Given the hype around AI and memory stocks this year, I wouldn't be surprised for that to happen.

The bigger test, however, is whether Micron will be able to stay there in the long run, and that's what I'm less convinced about. As the supply of memory products catches up to demand, the excitement around Micron may begin to cool. While a shortage may last for multiple years, forward-looking investors may begin to dump the stock even before the shortage is fully over. Micron may be a cheap-looking stock right now, but with its business being cyclical, its valuation can be misleading, as its growth prospects could change quickly.

While Micron may still have more upside, if you're buying the tech stock, you may want to keep a close eye on it because, as quickly as it has risen in value, it can also crash just as fast if the growth story unravels.

David Jagielski, CPA 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.