Micron (NASDAQ: MU) is an interesting stock. At face value, it has had a great 2026, up 140%. However, if you look at the stock’s valuation, some investors may be disappointed in those returns, as they could easily be far higher.
The reality is that the market isn’t valuing Micron’s stock as highly as it maybe should, and if Micron does the right thing, shareholder returns could explode over the next two years.
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I think a $10,000 investment in Micron stock today could be worth $50,000 by 2028. How? The memory chip market just needs to stay strong.
Memory chips are in high demand and short supply
Micron makes memory chips, but the AI build-out has soaked up all available production capacity. In fact, Micron told investors that market conditions will be worse in 2027 and 2028 than they were in 2026. While that may be bad news for their customers, it’s great news for Micron, as memory chip prices will remain elevated.
However, Micron is doing everything it can to increase output. In 2027 and 2028, it plans to have six new production facilities up and running worldwide. The question is, will that be enough? After all, the AI build-out is expected to intensify through 2030. With memory chip production capacity already expected to be sold out for the next couple of years, it’s not far-fetched to see more announcements about being sold out in 2029 or 2030. That will keep prices high, benefiting Micron.
The high prices have already caused Micron’s profits to reach all-time highs. With the chip shortage likely lasting for many more years, this likely won’t change anytime soon.
MU Gross Profit Margin data by YCharts.
The combination of soaring revenue and record margins has also led to huge growth for Micron.
MU EPS Diluted (Quarterly YoY Growth) data by YCharts.
Times have been good for Micron, and they will likely stay that way for a couple of more years. That gives the stock plenty of time to deliver strong returns, but how will it do it?
Micron’s returns will come from three places
The first place returns will come from is obvious: outright growth. With Micron standing up new production facilities, it will be able to rapidly grow its revenue based on sheer volume.
The second place will be share buybacks or dividends. Because Micron has grown so much, it has more cash than it knows what to do with.
