Is Micron Technology the Cheapest AI Stock? A Finance-Focused Take
AI infrastructure is starving for memory, and Micron sits in the middle of that demand. The stock is up big, but the setup still looks mispriced against its growth profile. Here's the case, the numbers, and what to track next.
The thesis in 60 seconds
- HBM capacity is sold out through 2026; Micron can meet only 50%-66% of customer bit demand.
- Guiding Q2 FY2026 revenue to $18.7B, up 132% year over year; FY2025 revenue was $37.4B.
- Forward P/E ~9.6x vs. ~25x sector average, with ~70% projected annual earnings growth.
- HBM4 is already allocated; tight supply supports pricing and margins.
Where Micron fits in AI
Micron builds DRAM and NAND that feed data to AI accelerators. High-bandwidth memory (HBM) is the critical piece for Nvidia and other system providers, and it requires about three times the production area of standard memory. That physics constraint keeps supply tight and gives pricing power to those with capacity.
Micron holds roughly 21% HBM share, behind SK Hynix, but the market is large enough that even a No. 2 position benefits from AI data center build-outs.
Sold-out capacity = pricing power
Micron's HBM output is fully allocated through 2026, including the HBM4 generation. With clean room space constrained, Micron says it can serve only 50%-66% of key customers' medium-term bit demand. That scarcity lets Micron prioritize higher-margin AI products and shift resources away from lower-return consumer lines.
Management is targeting roughly 20% shipment growth in both DRAM and NAND this year, which, paired with mix improvement toward HBM, should lift profitability.
Capacity expansion is coming, but demand still leads
Micron broke ground on a megafab near Syracuse, N.Y., supported by more than $6B from the CHIPS Act. New clean room capacity should start to help in 2027, though current industry forecasts suggest demand will keep outpacing supply well beyond that mark.
Learn more about the CHIPS Act
Valuation setup and upside math
On trailing earnings, Micron trades around 34x. On forward estimates, it's near 9.6x - far below the sector's ~25x - despite a projected ~70% earnings CAGR over the next five years. That disconnect is why the stock screens cheap relative to its AI exposure.
For Q2 FY2026, Micron guides revenue to $18.7B (+132% YoY) and adjusted EPS to $8.42. If revenue holds flat sequentially after Q2, annual revenue could approach ~$75B (about 2x last year) with adjusted EPS near ~$33.68. At a 34x multiple, that pencils to roughly $1,145 per share. Street consensus for FY2026 EPS is ~$32.67 (~$1,110 at 34x), with next-year EPS at ~$41.54.
Whether the market awards a trailing or forward multiple is the unknown. But at ~9.6x forward earnings, you're getting AI-cycle exposure at a discount to peers.
What to monitor
- HBM mix and ASPs: Tight supply should support pricing; watch for signs of easing.
- DRAM/NAND shipment growth: Management is targeting ~20% this year - track execution.
- Clean room expansions: Syracuse megafab milestones and any pull-forward of capacity.
- Customer concentration: Demand signals from Nvidia and hyperscalers.
- Technology transitions: HBM4 ramp timing and yields.
- Cycle risk: Memory remains cyclical; watch inventory levels and order patterns.
Risk checks
- Supply catches up faster than expected, pressuring pricing.
- AI workloads normalize or shift architectures, reducing HBM intensity.
- Ramp hiccups on HBM4 or delays in new fabs.
Bottom line
With HBM sold out through 2026, limited ability to meet demand, and guidance accelerating, Micron looks like one of the cheapest ways to get AI infrastructure upside. Zero sequential growth from here is unlikely given backlog and mix. Volatility is part of the memory game, but the risk/reward still skews favorable at a single-digit forward P/E.
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