If You Had Bought $5,000 of This Tech Stock 5 Years Ago, Here's What You'd Have Today

Micron Technology (NASDAQ: MU) has been on a tear due to the artificial intelligence (AI) memory bottleneck. It's up 1,030% over the last five years (as of May 28), meaning if you'd bought $5,000 of Micron shares five years ago, you'd now have $56,720.

Returns like those are a dream scenario, but they also lead to a difficult decision that Micron investors are facing right now: Do you continue holding or take your profits? Micron's previous results show the value of holding onto winners, but it's also important to consider the outlook.

Image source: The Motley Fool.

Most of Micron's gains are recent

Micron's five-year returns are fantastic, but the last year or so is doing most of the heavy lifting. Over the first four years of that period, Micron stock increased by just 14%, well short of the S&P 500. But over the last year, Micron has skyrocketed 858%.

It's a textbook example of why patience is a must when investing. Despite being an excellent company, Micron largely underperformed for several years. However, since it's one of only three companies worldwide capable of producing high-bandwidth memory (HBM), it was perfectly positioned to help meet AI-driven memory demands.

Micron has become quite volatile, and even in 2026, it has experienced several significant pullbacks. The company has rewarded investors who've held through this volatility, but will it continue to do so?

The future outlook for Micron

Considering it has been a 10-bagger over the last five years, Micron's valuation is surprisingly cheap. It trades at just 9 times forward earnings, which is practically unheard of among top AI stocks. For comparison, Nvidia trades at 22 times forward earnings. Advanced Micro Devices, another company that has soared recently, trades at 49 times forward earnings.

The risk is that memory companies are cyclical businesses. Historically, this industry's forward price-to-earnings (P/E) ratio has been lowest at the peak of the cycle, when earnings are at their highest. After the peak, the cycle turns, driving down earnings and share prices for these companies.

It's hard to say if the cycle has peaked, though, or if that trend will even continue. Memory demand is growing, and Micron has sold out its HBM production capacity in 2026. Micron has also leveraged the memory shortage to set up long-term contracts of three to five years with hyperscalers. Previous agreements lasted one year, so these long-term deals could smooth out Micron's earnings volatility.

I still believe Micron stock has room to run. At the same time, the cyclical nature of its business means it isn't the slam dunk its forward P/E ratio implies. Given Micron's volatility, it makes sense to dollar-cost average into it over time. And if you're a Micron investor worried about a downturn, you could always take some profits without selling your entire position.

Lyle Daly has positions in Nvidia. The Motley Fool has positions in and recommends Advanced Micro Devices, Micron Technology, and Nvidia. The Motley Fool has a disclosure policy.