‘Ride It Until 2028,’ Says Investor About Micron Stock

When it comes to Micron (NASDAQ:MU) stock, the bull and bear argument tends to break down along the lines of a simple question: how long will the good times last?

For those high on the DRAM and NAND maker, the AI supercycle has changed the contours of the playing field. The massive amount of money that hyperscalers are pouring into building out their AI capabilities has created immense demand for Micron’s products.

Recent revelations seem to back up this viewpoint. After all, the company has sold out its products through 2027, and CEO Sanjay Mehrotra disclosed in a recent interview that Micron is so supply-constrained that it is only able to deliver about 50% to 70% of ordered volumes.

And yet, there’s a counterargument. Those with a dour viewpoint note that manufacturing capacity will eventually scale to meet demand, making memory a commodity and driving down prices.

One investor, known by the pseudonym Millennial Dividends (MD), lands somewhere in the middle – strongly bullish in the near term, but mindful that the current setup may not last forever.

“I see continued upside into 2027 but advise exiting positions by late 2027/early 2028 as normalization and potential overcapacity loom,” the 5-star investor said.

The investor is fully aware of the “unprecedented” super-cycle, which has driven prices of a 16GB DDR4/5 chip from $5.515 to $39 in just 12 months (a 6x increase). That’s translated into simply astounding bottom lines for the company, driving up Micron’s EPS by a projected 600% in FY2026 (with another 75% expected in FY2027).

And though the company’s share price has been skyrocketing, the investor still thinks that MU stock remains undervalued. MU points to MU’s forward price-to-earnings multiple of 12.9x, which remains below its 15-year average of 21.6x – “suggesting there is more room to run and the stock could continue to grow.”

However, the pace of this growth won’t necessarily be open-ended, cautions MD. The investor foresees a scenario where Micron spends aggressively to expand manufacturing capacity, and is left holding the bag once the supply and demand dynamics become more evenly balanced.

“Micron’s shares must be priced taking into consideration the cyclical peak, midcycle, and downcycle,” the investor summed up, rating MU a Strong Buy. (To watch Millennial Dividends’ track record, click here)

Meanwhile, though Wall Street is clearly bullish on MU, that optimism comes with a caveat. With 27 Buys and 3 Holds, MU boasts a Strong Buy consensus rating. Yet, its 12-month average price target of $608.33 still points to downside potential of 16%. How can that be? The answer is simple: many price targets were issued before the stock’s latest surge, leaving consensus estimates lagging behind the rally. (See MU stock forecast)

Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.