Micron Technology's stock has climbed 226% this year - but its future driver of momentum could be something different than what's so far carried it into the artificial-intelligence winners circle.

Spectacular earnings growth has been the main force behind Micron's (MU) soaring stock price, rather than a change in how investors value each dollar that the company earns.

In fact, the stock has been notoriously cheap, trading at a 5.77 multiple of its price relative to estimated earnings for the next calendar year. That's the fifth lowest valuation multiple of any S&P 500 SPX component, according to Dow Jones Market Data.

But there's reason to believe that Micron shares could soon fetch a higher multiple, wrote TD Cowen analyst Krish Sankar. That sort of "rerating" could send the stock higher, he noted, at a time when investors might be worrying that there's not much more room for the company to expand its margins, a measure of profitability.

His price target of $1,600 is based on a price-to-earnings multiple of 9x 2027 estimates, notably above the current ratio of 5.77x. The target is about 70% ahead of current levels near $934.

Sankar notes that Micron is roughly 80% through its typical 18-month margin-expansion cycle, suggesting that earnings estimates in the near future might not increase as dramatically as they have been recently. With memory-chip prices so high, Micron saw its earnings per share rise 1,215% in its last-reported quarter, which illustrates the extent of profit improvement that investors have come to know.

He acknowledges a scenario where earnings fall from peak levels but "the stock keeps grinding higher." That's because he sees investors continuing to gain confidence that the memory cycle is "more durable than the margin path implies."

Demand for dynamic-random-access memory - used to store content for AI - has been booming, and won't be capped by demand for consumer electronics, which Sankar noted was the case in past cycles. Compared to prior downturns in 2019 and 2022, when "supply moved ahead of demand," this time is different, and that sustained demand could support the stock, he said.