Micron Is Quietly Becoming a More Reliable Long-Term Growth Play

Micron Technology (NASDAQ: MU) has delivered stellar returns to investors over the year, with its shares rising by an incredible 633% over this period. However, the memory specialist has seen a steep 30% pullback from the 52-week high it reached last month.

This drop in Micron stock seems quite surprising. After all, the company delivered blowout results just last month that should ideally have supercharged the stock. However, investors have been rotating out of memory stocks lately, as evidenced by the 23% drop in the Roundhill Memory ETF over the past month.

Savvy investors, however, should consider buying Micron following its recent pullback as it could become a long-term winner. Let's see why.

Image source: Micron Technology.

Micron will continue benefiting from the rapidly growing memory chip demand

Memory is essential for compute and storage in artificial intelligence (AI) data centers, computers, smartphones, vehicles, and other applications. AI, in particular, has supercharged the demand for this commodity.

Compute memory, known as dynamic random-access memory (DRAM), is being deployed extensively to transport enormous data sets in AI data centers and chip clusters. Similarly, storage-oriented NAND flash is also experiencing strong demand to store the massive amounts of data needed for AI model training and inference.

However, there isn't enough supply available to meet the booming demand. According to Micron peer SK Hynix, the memory supply crunch will worsen in 2027. Moreover, the South Korean giant projects that memory demand will continue to exceed supply even after 2030. Clearly, AI has brought about a structural change in the memory industry that will ensure manufacturers like Micron deliver reliable, consistent long-term growth.

That's precisely why it seems like a good time to buy this semiconductor stock following its recent drop.

The stock can make investors significantly richer over the long run

The undersupplied memory market gives Micron an upper hand in setting the price of its chips. It is well known that memory chip prices have jumped significantly in the past couple of years, and the continued shortage should ensure that the strong pricing environment persists. As a result, Micron's rapid earnings growth won't slow down.

Data by YCharts

Micron is currently in its final quarter of fiscal 2026. Analysts are forecasting a 785% jump in earnings per share this fiscal year to $73.37. Its earnings are projected to more than double in the next fiscal year, followed by a slower increase in fiscal 2028.

Data by YCharts

Analysts are predicting a much smaller increase of 9% in Micron's earnings in fiscal 2028, as seen in the above chart. Of course, there is enough evidence to suggest that Micron could do better than that, fueled by the memory chip shortage expected to last a long time. But even if Micron clocks just 10% in earnings growth in fiscal years 2029 and 2030, its bottom line could jump to $198.26 per share in four years.

Even if Micron trades at just 10 times earnings at that time, a significant discount to the S&P 500 index's earnings multiple of 25.6, its stock price would go up to nearly $2,000 over the long run. That's more than double the current stock price. What's worth noting is that I have assumed extremely low earnings growth for Micron beyond the next fiscal year, which is why I expect it to trade at a discounted valuation in 2030.

This means Micron could reliably deliver solid long-term upside, which is why it is worth buying the stock hand over fist before it goes on a bull run.

Harsh Chauhan 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.