This Growth Stock Keeps Outperforming the Market

Key Takeaways

• High-bandwidth memory chips are priced about four times higher than standard DRAM, and Micron is fully invested in this AI-driven segment.

• Micron significantly supports Nvidia’s AI leadership.

• While the memory market typically goes through cycles, this current rise seems to be a bit different.

About two years ago, Micron Technology appeared to be somewhat unstable. Its long-term returns were rather average, and the stock has seen significant fluctuations without quite catching up to the S&P 500 index over time.

Micron’s performance has been lackluster. The company saw its revenue decrease and, despite the growth of AI, has struggled recently. Unit prices dropped by more than 50% since mid-2021, resulting in losses and more cash being spent than earned.

The Shift in Memory Demand

Things have changed dramatically. As AI-focused companies began building large data centers in 2025, the demand for memory surged. Prices for older DDR4 memory modules climbed by 37% over two years, with modern DDR5 modules seeing prices triple during that timeframe. The high-bandwidth memory (HBM), crucial for AI servers, commands about four times the price of standard DRAM. Consequently, Micron has pivoted away from consumer chips to focus on this lucrative sector.

It’s interesting to note that Nvidia’s AI accelerator cards are packed with pricey HBM memory. For instance, the recently unveiled Vera Rubin superchip contains 0.5 terabytes of HBM, highlighting Micron’s pivotal role in Nvidia’s growth journey.

A Different Memory Market Landscape

If AI expansion continues for a few more years, the pattern in the memory sector could be quite unlike previous cycles. Micron’s leadership believes that the chip shortage may persist until 2028, with explosive growth in the HBM market reshaping the industry landscape.

Micron’s CEO, Sanjay Mehrotra, has forecasted a compound annual growth rate (CAGR) of approximately 40% for the HBM total addressable market (TAM) by 2028, suggesting a rise from about $35 billion in 2025 to around $100 billion by 2028. This potential growth indicates an exciting trend for Micron, as revenue has doubled in the past two years, with a notable profit margin of 28%.

If We Look at Stock Performance

Micron’s recent business growth has led to a significant rise in stock prices. It has performed impressively over various time frames, placing it among the top performers on the S&P 500.

With the current AI boom potentially sustaining, Micron stands as a high-growth stock for the foreseeable future. While its stock might not appear cheap based on traditional metrics, the anticipated growth trajectory alters that perspective significantly. Micron’s stock is trading at about 9.9 times expected earnings, which is considerably low in terms of PEG ratio, making it seem quite undervalued.

Is Now the Right Time to Invest in Micron Technology?

Before making a decision on Micron Technology stock, consider that while our analyst team has identified other stocks that may yield impressive returns in the coming years, Micron didn’t make the cut this time. However, given Micron’s current market position, it might be worth keeping an eye on as it seems poised for continued growth against the S&P 500.