The memory market saw a turnaround in 2023 after being under the weather for around two years. Prices of dynamic random access memory (DRAM) chips fell from the end of 2021 to the end of 2023, crushing Micron’s top and bottom lines in the process.

MU Revenue (Quarterly) Chart

The good news for Micron is that DRAM prices are expected to jump between 10% and 15% in the first quarter of 2024. The price rise was driven by growth in multiple areas, ranging from personal computers to smartphones to servers, and that’s not surprising considering the growing adoption of AI in these areas.

AI servers, for example, create the need for more high-bandwidth memory chips as major chipmakers use this type of memory in their AI accelerators. Similarly, the advent of AI-enabled PCs and smartphones should drive a stronger demand for memory chips. All this explains why Gartner forecast an 88% increase in the memory market’s revenue this year to $87 billion, driven by stronger pricing and volumes. Meanwhile, storage memory revenue is also predicted to increase by almost 50% in 2024 to $53 billion.

The memory market’s recovery is the reason Micron’s revenue is forecast to increase an impressive 46% in the current fiscal year to $22.7 billion, according to consensus estimates. Analysts expect the momentum to continue over the next couple of fiscal years as well.

Micron stock currently trades at 6.6 times sales. That’s lower than the Nasdaq-100’s price-to-sales ratio of 7.3, suggesting that investors are getting a good deal on this semiconductor stock now. That’s because a sales multiple of even 6 after a couple of fiscal years indicates that Micron could be sitting on a market cap of $212 billion. That’s almost double its current market cap of around $107 billion, which is the reason investors should consider buying this Nasdaq stock before it skyrockets.

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