Micron Technology has undergone a remarkable transformation in recent years, propelling its stock performance to outstrip the S&P 500 significantly. For two decades leading up to 2024, Micron appeared to be a volatile stock option, trailing with an average annual return of 9.1%, slightly below the S&P 500’s 9.7%. This changing narrative can primarily be attributed to the burgeoning artificial intelligence (AI) sector.
In early 2023, Micron faced challenges with declining revenues and cash flow issues, exacerbated by a saturated memory chip market, which saw unit prices drop more than 50% from their 2021 heights. However, the tides shifted dramatically in 2025 as demand for memory chips skyrocketed, driven by hyperscale AI specialists who began establishing extensive data centers. These facilities are critical for powering advanced AI applications, including large language models and generative AI tools.
The prices for memory modules saw a significant uptick: last-generation DDR4 memory modules increased by 37% over two years, while newer DDR5 modules experienced a threefold price surge. Micron pivoted its focus from consumer-grade chips to high bandwidth memory (HBM), which is notably favored by AI servers and can fetch prices four times higher than standard DRAM products. Each AI accelerator card produced by Nvidia, a key player in AI technology, features substantial amounts of HBM memory, cementing Micron’s crucial role in that ecosystem.
Micron’s optimistic outlook is further reinforced by management’s projections, anticipating chip shortages to persist until 2028 and forecasting a compound annual growth rate (CAGR) of 40% for the HBM market over this timeframe. CEO Sanjay Mehrotra stated in a recent earnings call that the HBM total addressable market (TAM) is set to grow from approximately $35 billion in 2025 to around $100 billion by 2028, surpassing the entire DRAM market’s size expected for 2024.
This strategic shift has had a profound effect on Micron’s financial health. Over the past two years, revenues have doubled, leading to a return to profitability with a trailing net margin of 28%. Investors have taken note, resulting in a meteoric rise in Micron’s stock price. Recent performance metrics reveal stunning returns: over the past month, the stock surged by 51%, while a year’s performance showed an astonishing increase of 371%. In three years, returns reached 594%, and over the past decade, a staggering 4,171%.
Despite its explosive growth, Micron represents a potentially undervalued investment, trading at 9.9 times forward earnings estimates, with a price-to-earnings growth (PEG) ratio of just 0.13. This metric is among the lowest in the S&P 500, suggesting that Micron’s stock may still have room to rise based on its growth trajectory.
Currently, Micron’s stock price stands at $424.25, with a market capitalization of $490 billion and recent trading activity mostly ranging between $421.98 and $455.42. As the AI industry continues to evolve, Micron’s positioning as a leading player in the memory chip market suggests that it may continue to outperform the S&P 500 in the foreseeable future. Investors remain optimistic, anticipating that Micron’s stocks will echo the best of the past while leveraging modern technological advancements.
