The Memory Boom Helped Micron Deliver a Record Year. Here’s Where the Stock Will Be in 3 Years

Micron Technology (NASDAQ:MU) stock has jumped by more than 6x over the past year, and it looks like the memory specialist's stunning rally won't be ending any time soon.

Micron released record results for the fourth quarter of fiscal 2026 (which ended Sept. 3), easily crushing consensus estimates amid the artificial intelligence (AI)-fueled memory boom. What's more, management clearly noted on the latest earnings call that the favorable memory market dynamics driving Micron's phenomenal growth will continue for the next couple of years.

Let's take a closer look at Micron's prospects and check the potential gains investors can expect from this high-flying growth stock over the next three years.

Image source: Micron Technology.

Micron says that the memory supply will get tighter

Micron's fiscal 2026 revenue increased by 256% over the prior year, reaching $133.2 billion. Meanwhile, the company's operating income margin nearly tripled last year to 76%, as memory demand outstripped supply and pushed up prices. As a result, Micron's non-GAAP earnings per share increased by just over 9x from the prior year to $75.52 in fiscal 2026.

Any questions about whether Micron could sustain its stunning earnings growth were put to rest by CEO Sanjay Mehrotra on the latest earnings call. He remarked:

As strong as fiscal 2026 was, we expect fiscal 2027 to be even better. Industry demand has strengthened since our last earnings call, and we expect memory and storage supply-demand conditions to be much tighter in fiscal 2027 and 2028 than they were in 2026.

In simple words, Micron should be able to sustain robust earnings growth over the next couple of years, at least. However, I won't be surprised to see Micron's momentum continue beyond fiscal years 2027 and 2028. That's because the company has been signing long-term contracts that should ensure healthy growth through the end of the decade, and even beyond 2030.

Micron notes that it has signed 26 strategic customer agreements (SCAs), which will account for 35% of its revenue through 2030. The company is now receiving customer requests to sign supply agreements extending into 2031. According to Micron, 75% of these SCAs have a defined price band with both a floor and a ceiling price. The pricing for the remaining long-term agreements will be negotiated with customers periodically in response to market dynamics.

Given that supply constraints in the memory market are expected to persist until 2030, there is a strong chance Micron will enjoy favorable pricing through the end of the decade. As such, it is easy to see why analysts have become more bullish about the company's long-term earnings growth expectations.

Can the stock become a multibagger once again?

The good news for investors is that they can buy Micron stock at an incredibly attractive valuation. The stock is trading at just 14.6 times earnings, a discount to the S&P 500 index's earnings multiple of 23.5. Micron should trade at a significant premium considering its exponential earnings growth. Moreover, analysts are expecting its earnings per share to jump by 134% in fiscal 2027 to $176.69, followed by a 16% increase in fiscal 2028 to $205.30, according to Yahoo! Finance.

Assuming Micron clocks a conservative 10% earnings growth in fiscal 2029, its bottom line will reach $225.83 after three years. If this AI stock trades at even 10 times earnings at that time, well below the S&P 500 index's forward earnings multiple of 20, its price could reach $2,258. That implies potential upside of 106% in three years.

However, Micron's gains could be significantly higher if the market rewards the stock with a premium valuation. So, investors looking to buy a value stock with multibagger potential can still consider Micron Technology, as fast-growing memory demand in AI data centers and the accompanying supply shortage should drive further growth in the company's earnings over the next three years.

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.