Micron's Stock Is Up 861% Over the Past Year. These Analysts See 30% Upside From the Current Price.

There have been many artificial intelligence (AI) stock winners over the past few years, but Micron Technology (NASDAQ: MU) stands out even among some of the biggest winners. Its share price is up an impressive 861% over the past year alone, a nearly unfathomable return.

What's even more shocking is that many analysts think Micron stock has more room to run, with three of them recently setting price targets of $1,500 for the stock -- a 74% increase from its current price as of this writing.

Here's why they're optimistic and what investors should know about Micron's cyclical memory business.

Image source: Getty Images.

Here's why analysts are bullish on Micron

Analysts at Deutsche Bank, TD Cowen, and Cantor Fitzgerald all recently raised their $1,500 price targets for Micron's stock and had some very positive things to say about the company, including:

• Cantor Fitzgerald analyst C.J. Muse said the AI memory up cycle is "only in its early to middle innings."
• TD Cowen analyst Krish Sankar said memory spending is "structural rather than cyclical," meaning it may not revert to lower demand as most memory cycles have in the past.
• Deutsche Bank analyst Melissa Weathers said DRAM supply tightness "could persist well into 2028 and potentially beyond."

These are some promising comments for Micron and its memory business, and they come despite the past trends showing that memory stocks like Micron tend to have boom-and-bust cycles.

Is this time really different?

Even with the understanding that Micron and memory stocks in general are cyclical, the current rise of Micron's stock is pretty astounding. Just look at this chart of Micron's stock price over the past 20 years:

Data by YCharts.

Some of the past boom-and-bust cycles are just a small blip compared to Micron's mountainous gains over the past year.

The big question, of course, is whether Micron can continue going higher.

There are some very reasonable reasons to be optimistic. For one, there is a legitimate AI infrastructure boom that's happening. This year alone, some of the leading tech companies will spend a combined $750 billion on AI.

Much of that is going to data centers, which, of course, use a lot of Micron's memory processors. And some tech giants are already indicating they'll continue spending. Alphabet's capital expenditures will reach up to $190 billion this year, mostly for AI infrastructure, and management told shareholders that spending will "significantly increase compared to 2026."

There are recent signs that the current memory crunch could be around for a while, as Apple recently raised prices on its devices, with CEO Tim Cook citing higher memory costs as the reason for the "unavoidable" price increase.

The analysts could be right that Micron is in a new era of prolonged memory demand. But I think investors should understand that this doesn't necessarily mean Micron's shares will continue to climb higher.

Consider another high-flying semiconductor stock, Broadcom. The company reported its second-quarter results recently, with non-GAAP (generally acceptable accounting principles) earnings per share of $2.44, beating Wall Street estimates, and AI semiconductor revenue rising 143% to $10.8 billion.

Impressive results, but Broadcom's stock has tumbled over the following weeks. Investors were disappointed that the company's management didn't raise its AI chip guidance from its previous $100 billion estimate.

Broadcom could bounce back, of course. But the point is that some shareholders are ratcheting up their expectations for AI companies. And when their expectations go unmet, even if they're unrealistic, some investors go looking elsewhere.

I wouldn't be surprised to see some of this play out with Micron as the stock reaches dizzying levels.

That doesn't mean you should sell your Micron stock now, but the recent price increases have raised expectations to very high levels. And shareholders should expect some volatility in Micron stock as a result.

Chris Neiger has positions in Apple. The Motley Fool has positions in and recommends Alphabet, Apple, Broadcom, and Micron Technology. The Motley Fool has a disclosure policy.