Perhaps one of the surprises in the AI boom has been Micron (MU +2.70%) stock. The memory chip giant that once struggled to hold on to its gains during bull cycles has surged to record levels, even surpassing the $1 trillion market cap level. This would have been unthinkable 10 years ago, when the stock sold for just $12 per share.

Amid the nearly 7,800% increase in the chip stock‘s price, investors may wonder what to make of Micron stock. Although one can make solid arguments for buying and holding Micron stock, investors need to keep two facts in mind before proceeding.

1. “It’s different this time.”

Admittedly, most seasoned investors cringe when they hear the expression, “it’s different this time.” Investors who bought shares of stock after hearing that expression often learn that nothing was “different” in the end, and when a once high-flying stock crashes, it often decimates investor wealth.

However, the current Micron rally is truly different in one respect, and investors have high-bandwidth memory (HBM) to thank for that. HBM is a fundamentally different type of memory that did not exist, first coming to market in 2015 when AMD released its Radeon R9 Fury GPU. HBM is a 3D-stacked memory technology built for massive data throughput.

HBM revolutionized the memory chip industry, making today’s AI technology possible. That changed the prevailing trading pattern of Micron stock between 1996 and 2016, when it lost value.

Today, the structural change driven by HBM has become tremendously bullish for Micron, and the ability to better hold on to gains has likely been a factor in its stock rising to record levels.

Micron Technology

Today’s Change

(2.70%) $27.95

Current Price

$1063.45

2. Micron has not escaped the semiconductor cycle

However, what is not different is the cyclicality of the memory market. Historically, Micron stock has shot higher in times of memory shortages. This is the situation the stock faces today, and consequently, those who bought Micron stock earlier have likely profited tremendously.

Still, when Micron stock keeps going up, it is easy to forget the downside of the cycle. Historically, Micron would eventually overproduce memory chips, causing prices to fall and taking Micron’s profits and its stock down with it.

While the entire chip industry faces this cycle, it has always been most extreme in the memory chip market. For now, no signs have appeared that a down cycle is near, meaning the up cycle could continue for some time to come.

Nonetheless, a down cycle has followed every up cycle historically. Thus, Micron shareholders need to continue watching for such an occurrence.

Investing in Micron stock amid those factors

Ultimately, both the effects of HBM and the cyclical nature of Micron stock make it a difficult stock to buy right now.

Admittedly, the HBM market is unlikely to slow anytime soon. That could mean that the bull market in memory stocks like Micron could continue.

However, history tells investors that the cycles persist, and they are more extreme for the memory market than other parts of the chip industry. Thus, in times of record stock prices, only risk-tolerant investors should buy at these levels, and the harsh nature of memory chip down cycles suggests that even they should proceed cautiously.