Micron Technology (NASDAQ: MU) stocks have surged over 300% in the past year due to a shortage of memory chips from the AI boom. Analysts predict revenue to double to $75.4 billion in fiscal 2026, with adjusted earnings per share quadrupling to $33.38, giving the stock a forward P/E of 12.

The memory subsector is experiencing a supercycle, driving up stocks like SK Hynix, Samsung, and Sandisk. Memory chips are prone to boom-and-bust cycles, with Micron experiencing multiple cycles in the past decade. Analysts estimate record profits for Micron, reaching around $35 billion this fiscal year.

Past memory cycles for Micron have been short, with trough-to-peak periods lasting a couple of years. The current boom in memory has unique elements, including high capital expenditures from major tech companies and ongoing strong demand for memory, leading to favorable supply-demand dynamics. Micron’s profits are expected to soar in the next year as AI demand continues.

Investors should be cautious despite Micron’s recent gains, as the stock could still double before peaking. While the memory cycle will eventually turn, new capacity takes time to come online, maintaining the shortage. The surge in stock prices may lead to a significant sell-off when the cycle eventually shifts.

Considerations before buying Micron Technology stock include insight from the Motley Fool Stock Advisor team, who suggest 10 other stocks for potential high returns. The team has a total average return of 918%, outperforming the S&P 500. While Micron remains a strong player in the AI boom, investors should weigh the risks of the cyclical nature of the memory industry.

Read more at Nasdaq: How High Can Micron Go In the Memory Supercycle? Here’s What History Says