Micron technology (MU 1.23%) The stock rose 1.5% by 10 a.m. ET on Wednesday after the computer memory (DRAM and NAND) maker received a letter of support from the investment bank Citigroup.

Citi reiterated its buy rating on Micron and reiterated its price target of $175, which may not sound so great. (Same old story.) But here’s the thing: Micron stock is only $99 today.

And if Citi is right, that means Micron stock has over 75% upside potential.

Why Citi likes Micron stock

Citi’s note highlights both positive and negative developments for Micron. On the negative side, the analyst acknowledges that some DRAM inventory has built up in the PC supply chain. Because of this, Citi lowered its revenue forecast for Micron in 2024 (albeit only by 1% to $25.1 billion). The analyst also lowered its earnings forecast by a more significant 7% to $0.61 per share.

On the positive side, DRAM prices are rising. Citi has cut its forecasts for fiscal 2025, but still expects revenue of $38 billion (not $39 billion) and earnings of $9.89 per share next year – not $10.17.

And even $9.89 per share would be a fantastic Improvement over what Citi expects for Micron this year: This would mean growth of 1,520%.

Is Micron stock a buy?

How much is a 15x earnings gain worth, considering that Micron operates in the highly volatile and extremely cyclical semiconductor industry, where earnings swings and dips occur regularly? According to a StreetInsider.com report that includes the analyst’s note, Citi thinks it’s worth about 15x earnings. At the same time, Micron stock today costs a little more than 11x earnings that most analysts expect over the next 12 months.

That doesn’t sound too expensive to me. But investors in Micron need to be aware that investing in this sector is extremely tricky. Just because Micron is unprofitable today (and it is) doesn’t mean it will still be unprofitable a year from now. But even if Micron is profitable next year, that doesn’t mean it will still be profitable the year after that.

Investors should be careful.