Key Points
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Micron may have pulled back significantly since hitting a 52-week high, but its growth and prospects remain solid.
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Shares of the memory specialist roared back impressively after its early 2025 sell-off.
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Tighter memory market conditions in 2027 and 2028 will supercharge Micron stock.
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Micron Technology (NASDAQ:MU) has delivered stellar gains to investors in 2026, but the past few months have been quite forgettable.
Shares of the memory specialist have retreated 40% from the 52-week high reached on June 25. The broader sell-off in artificial intelligence (AI) stocks, driven by concerns about the sustainability of aggressive infrastructure spending amid rising borrowing costs from high interest rates, has weighed heavily on Micron lately.
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However, this isn’t the first time that Micron stock has been caught up in a broader market sell-off. Let’s see what happened the last time there was a steep sell-off in Micron’s shares.
Image source: Getty Images.
Micron stock went on a terrific bull run after the tariff-induced pullback last year
There was a meltdown in technology stocks early last year when President Donald Trump announced tariffs on imports of goods into the U.S. The tariffs created panic among investors, driven by the belief that higher costs of goods due to import taxes were likely to hurt demand for various products.
There were reports that even Micron had to impose a surcharge on some of its products to offset the impact of tariffs. The fear of the tariffs’ potential impact on Micron and other semiconductor companies’ sales led to a big pullback in tech stocks. The Nasdaq Composite index lost nearly 20% of its value in just two and a half months, between early February and late April last year. Micron stock shed 30% of its value during this period.
However, Micron went on a remarkable bull run following this pullback. Shares of the company have skyrocketed by 830% since the beginning of May 2025 until now. This stunning rally has been fueled by Micron’s healthy revenue and earnings growth, driven by a favorable memory market in which demand has significantly outpaced supply.
MU Revenue (TTM) data by YCharts
The good news for Micron investors is that the memory market’s dynamics will remain in the company’s favor. As such, I won’t be surprised to see Micron stock going on another massive rally over the next couple of years, just like what happened after its 2025 sell-off.
The stock could replicate its phenomenal run once again
Memory demand is poised to outstrip supply for the foreseeable future. Micron’s peer SK Hynix (NASDAQ:SKHY) recently noted that it expects the memory market to remain supply-constrained until 2030. The South Korean memory giant points out that solid demand from AI data centers and emerging applications, such as humanoid robots, will be a tailwind for the market.
Additionally, SK Hynix notes that the new memory factories will take time to come online. As it turns out, more than half of SK Hynix’s production capacity for 2027 and 2028 is already booked. Even Samsung estimates it won’t be able to meet memory demand until 2028.
It is worth noting that Samsung and SK Hynix control 63% of the global dynamic random-access memory (DRAM) market, according to Counterpoint Research. Meanwhile, they control 47% of the NAND flash market. Micron, on the other hand, has a 24% share of DRAM, while its NAND flash share is 15%. Even Micron management remarked on the previous earnings call that memory and storage supply will tighten in 2027 and 2028.
Not surprisingly, Micron expects fiscal 2027 to be “even better” following a terrific fiscal 2026. Micron’s fiscal 2026 ended on Sept. 3, and the company posted a 9x increase in adjusted earnings per share (EPS) to $75.52. The EPS estimates for the next couple of fiscal years point to durable growth in Micron’s bottom line.
MU EPS Estimates for Current Fiscal Year data by YCharts
Also, the chart above indicates that analysts have been gradually raising their EPS estimates, which isn’t surprising given tight supply conditions. Assuming Micron’s EPS jumps to $207.76 in fiscal 2028 and it trades at even 10 times earnings at that time, in line with its current price-to-earnings ratio, the stock could soar to $2,078.
That implies a 172% jump from current levels, suggesting investors can buy a potential multibagger at an attractive valuation following Micron’s recent pullback.
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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.
