It’s been four years since OpenAI’s ChatGPT was launched to the world generative artificial intelligence (artificial intelligence), and the megatrend shows no signs of slowing down. shares Micron Technology(NASDAQ:MU) Initially behind early winners, e.g. NVIDIAbut they’re now catching up in spectacular fashion, with the stock up about 600% over the past three years.
Despite its explosive growth, Micron Technology’s stock price remains reasonable compared to other stocks in the technology industry. Let’s find out why this memory chip company still looks poised for success and try to predict where its share price might be headed by the end of 2026.
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The AI hardware story often focuses on graphics processing units (GPUs) and other similar chips that bear the brunt of the work of running and training large language model (LL.M.). But behind the scenes, computer memory is needed to store the vast amounts of data required to train the LL.M., while also providing the “working memory” these algorithms need to access information in real time and respond to user queries.
According to analysts Goldman Sachs, Data center-related capital expenditures by AI companies may exceed $5 trillion in 2026 alone. Memory chip makers like Micron are likely to account for a large portion of that spending. The momentum has already begun.
Micron’s fiscal first-quarter revenue rose 57% year-over-year to $13.6 billion, driven by strength across all its operating units, especially its cloud storage unit, which serves hyperscale enterprises that use its hardware to generate artificial intelligence workloads. The cloud storage business also has higher profit margins than the rest of the company. And this trend is improving, Gross profit margin Year-on-year growth increased from 59% to 66%.
Image source: Getty Images.
The company’s cloud storage unit has a gross margin of 66%, quickly catching up with Nvidia, which has a combined gross margin of about 73% across its divisions. Micron’s profit margins are likely to continue to improve amid widespread memory chip shortages.
wall street journal The report said that soaring demand has caused memory hardware prices to rise by 50% in the fourth quarter of 2025, and may rise by another 40% to 50% in the first quarter of this year. While much of the demand is for high-end AI chips, it could also push up prices for other types of memory hardware (used in cars and phones) as manufacturing capacity shifts to higher-end products.
Predicting the future is impossible because conditions in financial markets change very quickly. That said, available data suggests Micron stock will continue to grow over the next 12 months as data center customers continue to compete for computer memory hardware, driving up revenue and profits. The best part is that the stock’s current valuation doesn’t fully reflect these catalysts.
with striker Price-to-earnings ratio (P/E) There are only 12 of them, but they still trade for less than Nasdaq 100 Index The average is 26, which seems too low considering the company’s recent success.
Investors have long been skeptical of investing in memory chip stocks due to industry challenges such as commoditization (memory chips have a shallow economic moat), so investors may give Micron a discount, which can lead to boom and bust cycles as supply eventually catches up with demand. However, management can mitigate the impact of such challenges by leveraging current cash flow for stock buybacks, which should keep earnings per share (EPS) high even if memory prices eventually fall in the future.
A share price of around $500 looks reasonable by the end of 2026, which would be a more than 30% upside from Micron Technology’s current share price of around $380. This gain will fuel the company’s growth while also taking into account the fact that memory demand may not remain high forever.
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Will Ebiefung has no position in any of the stocks mentioned. The Motley Fool has a position and recommends Micron Technology and Nvidia. The Motley Fool has a disclosure policy.
Prediction: Micron stock will reach this level by the end of 2026 Originally published by The Motley Fool
