Even among AI stocks, it’s hard to find companies that can match the recent performance of Micron technology (NASDAQ:MU). The longtime supplier of semiconductor memory chips has seen its stock quadruple over the past year, reaching record levels. Record demand for memory chips from AI hyperscalers looking to increase data center capacity has been the main fuel for Micron’s rise, but other factors have also worked in Micron’s favor. The question now is how long the good times can last and what might happen when the music stops.
Over the past few days, the previous two articles in this three-part series on Micron for the Voyager Portfolio have given investors context on the chipmaker’s history and its recent financial performance. This latest article concludes by analyzing whether Micron’s growth is sustainable and what could happen to its share price in the future.
Will AI create the world’s first billionaire? Our team just published a report on a little-known company called “Indispensable Monopoly” that provides critical technology that both Nvidia and Intel need. Continue “
Image source: Getty Images.
In the past, when Micron enjoyed strong demand that allowed it to increase prices, favorable conditions led it to develop greater production capacity to make the most of the short term. However, once that additional capacity came online, it disrupted the balance between supply and demand. Additionally, when demand slowed due to cyclical factors facing electronics hardware and equipment manufacturers, Micron and its industry peers found themselves with excess capacity and a glut of memory chips, causing prices to fall.
However, Micron CEO Sanjay Mehrotra believes this particular cycle is different due to the strength of the end markets it serves. Broadly speaking, Mehrotra believes that memory has become essential to the pseudocognitive functions of AI, and that makes memory less of a regular component and more of a strategic asset that gives those who possess it advantages over those who do not. Without adequate memory, features such as real-time feedback from AI models become inaccessible.
Almost all of Micron’s end markets are lining up in its favor. Data center construction continues to accelerate and the company expects a multi-year effort that will allow Micron to ramp up production of its high-bandwidth, high-capacity server memory solutions. Solid state drives made specifically for data center use will also benefit from these trends.
Meanwhile, in the PC world, the end of life of Windows 10 is causing an upgrade cycle, as is the arrival of AI-focused PC hardware. Although smartphone sales are growing less rapidly, there is still demand for more memory as mobile devices incorporate more artificial intelligence features. And in the automotive and industrial areas, the growing capability for autonomous operation is making memory increasingly important as well.
In response to the faster construction plans it is seeing from its customers, Micron now believes the main constraint to growth in 2026 will be its ability to provide supply, with shipments expected to increase by approximately 20%. To grow more quickly in the future, Micron is increasing its capital expenditures to $20 billion for the year. New U.S. facilities are likely to come online in 2027, 2028 and 2030, and international facilities will also add capacity.
However, the long-term threat is that investors have let Micron’s share price outpace its true prospects for sustainable growth. Earnings multiples of around 30 will almost certainly fall as Micron ramps up production. But what has happened in the past is that the threat of an imminent oversupply has led to a larger multiple contraction than investors anticipated, causing sharp declines in stock prices.
I see it as a very real threat, regardless of whether it takes longer or less time to develop than in previous cycles. That is why Micron will not be part of the Voyager Portfolioand technology investors should be careful about adding to positions at current levels.
Before you buy Micron Technology stock, consider this:
He Varied and Dumb Stock Advisor The analyst team has just identified what they believe are the 10 best stocks for investors to buy now… and Micron Technology was not one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you would have $439,362!* Or when NVIDIA made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you would have $1,164,984!*
Now, it is worth noting stock advisor The total average performance is 918.%: An overwhelming outperformance of the market compared to the S&P 500’s 196%. Don’t miss the latest Top 10 list, available with Stock Advisorand join an investing community created by individual investors for individual investors.
See the 10 actions »
*Stock Advisor returns from February 10, 2026.
Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool positions and recommends Micron Technology. The Motley Fool has a disclosure policy.
Can Micron Technology Stock Avoid a Future Crash? was originally published by The Motley Fool
