If You Had Invested $10,000 in Micron's Shares Nine Years Ago, Here's Your Current Worth
Micron Technology, ticker symbol MU 3.07%, has been a perplexing investment for many semiconductor stock enthusiasts. Known for its volatile nature, chips have seen their fair share of ups and downs, often leading to the erasure of gains from recent bull markets. However, the advent of cloud computing and artificial intelligence (AI) has flipped the script for Micron.
Since hitting rock bottom in 2016, Micron has emerged as a star performer. Investors who dared to invest $10,000 during this period at $9.68 per share would now be enjoying a hefty return of $106,800, now that the stock's price has soared. Despite facing several industry cycles in the past, Micron has managed to cling on to much of its gains, delivering impressive returns.
The Micron Turnaround
The year 2016 marked a significant turning point for Micron. The company was grappling with an industry downturn, but this period offered a golden opportunity for risk-takers. Those who bought at the stock's low were handsomely rewarded.
However, it's important to note that Micron's history has been marked by a labyrinth of boom-and-bust cycles. For instance, the company had reached the same $9.68 per share price tag in 1994, only to postpone any net gains until 2016. This setback equated to a staggering 90% discount from Micron's then-record high in 2000.
Investing in Micron during its downturn periods required a crystal ball to foresee the imminent paradigm shift. Cloud computing and AI presented the innovation that finally breathed new life into the memory chip space and significantly reduced market volatility. As long as this rapid pace of innovation continues, Micron's long-term bullish performance should persist.
The Power of AI and the Burgeoning Memory Chip Market
Here's where AI comes to play. The growth in AI applications has resulted in a surge in demand for high-bandwidth memory (HBM). Micron's cutting-edge HBM chips are powering Nvidia's upcoming GeForce RTX 50 series and Nvidia's Grace server CPUs, providing Micron with a strong foothold in the AI market.
This AI-driven growth has propelled Micron's revenue, resulting in a 12% YOY increase to $8.7 billion in Q1 2025. Meanwhile, Micron's EPS have undergone a remarkable transformation, leaping more than five-fold from $1.30 per share in fiscal 2024 to an anticipated $6.92 per share in fiscal 2025.
Analysts foresee a strong future for Micron, projecting the company's revenue to reach $35 billion in fiscal 2025, marking a 39% increase from the previous year. In fiscal 2026, Micron's revenue is forecasted to surge by 28% to just shy of $45 billion. The corresponding EPS growth is even more impressive, with a projected leap of 65.4% to $11.45 per share in fiscal 2026.
Solid Fundamentals and Attractive Valuation
Micron's impressive economic metrics are hard to ignore. Despite a recent sell-off following Q2 guidance, analysts remain enthusiastic about Micron, setting the average price target at a handsome $128.82. This bullish sentiment effectively translates to a potential upside of 25.40%. Micron's robust fundamentals, exciting growth prospects, and attractive valuation seem to position the company as an appealing investment opportunity for long-term investors.
The financial success of Micron Technology post-2016 has been a testament to the power of investing during downturns. Those who invested $10,000 at $9.68 per share during this period have seen their investment grow to an impressive $106,800 due to the stock's significant price increase.
In the current market environment, the company's strong foothold in the AI market, driven by the demand for high-bandwidth memory (HBM) for AI applications, has resulted in impressive financial metrics. Analysts forecast Micron's revenue to reach $45 billion in fiscal 2026, marking a substantial growth of 28% from the previous year. This positive outlook, coupled with a potential upside of 25.40% as indicated by the average price target of $128.82, makes Micron an attractive investment opportunity for long-term financiers.
