Fueled by the AI boom, Micron Technology has seen its stock surge. The memory chip maker's shares have climbed roughly 600% in the last three years. Analysts predict continued growth, especially with increasing demand for memory hardware in data centers. Strong revenue and expanding margins, particularly in its cloud memory unit, are key drivers for the company.

Goldman Sachs suggests AI-related data center spending could reach over a half-trillion dollars in 2026. Micron is well-positioned to capitalize on this trend. The company's fiscal first-quarter revenue jumped 57%, and its cloud memory division is nearing Nvidia in terms of gross margins. Memory chip shortages are also pushing up prices.

According to the article, the stock could reach $500 by the end of 2026, representing a 30% gain. Currently, the stock trades at a forward P/E of 12, a discount compared to the Nasdaq 100 average of 26. This projection takes into account the potential for continued growth.

While the memory chip market faces challenges, Micron's management can use cash flow for share repurchases, potentially mitigating future price drops. The Motley Fool suggests investors consider other stocks, but Micron is still seen as having significant upside potential, given its role in the AI hardware supply chain.