TLDR
- Micron Technology (MU) stock gained 315% in 12 months as AI memory chip shortage drives RAM prices up 50% in Q1 2026
- Fiscal Q1 2026 revenue rose 57% to $13.6 billion with DRAM sales comprising 79% and net profit margin reaching 28.15%
- Company investing $100 billion in New York chip factory while abandoning consumer PC market for AI memory focus
- Forward P/E ratio of 10.57 versus semiconductor industry average of 43.44x suggests relative value
- Discounted cash flow model estimates fair value at $189.89 per share compared to current price of $411.66
Micron Technology stock has surged 315% over the past year as artificial intelligence applications create massive demand for memory chips. The rally pushed shares to $411.66, but conflicting valuation metrics have investors questioning whether the momentum can continue.
The company dominates memory hardware manufacturing alongside Samsung and SK Hynix. This trio supplies nearly all DRAM and RAM chips worldwide. AI’s relentless need for memory has triggered shortages that Intel CEO Lip-Bu Tan expects will last through 2028.
Industry analysts forecast RAM prices jumping 50% in Q1 2026 alone. This pricing environment translates directly into stronger financial performance for Micron.
Financial Performance Accelerates
Revenue for fiscal 2026’s first quarter hit $13.6 billion, marking 57% growth year-over-year. DRAM products generated 79% of total sales, confirming AI infrastructure as the main growth engine. The company posted gross margin of 56.8% and net margin of 28.15%.
Micron made a strategic exit from the consumer PC market in late 2025 to dedicate resources entirely to AI memory production. The shift demonstrates management’s conviction in long-term demand from technology companies building AI systems.
The chipmaker started construction on a $100 billion semiconductor plant in upstate New York last month. The massive facility will create over 9,000 jobs and rank as the largest chip manufacturing site in the United States when completed.
Valuation Metrics Send Mixed Messages
Discounted cash flow analysis values Micron at $189.89 per share based on projected future cash flows. The current share price of $411.66 sits 116.8% above this DCF-based fair value estimate, pointing to potential overvaluation.
Price-to-earnings ratios paint a contrasting picture. Micron’s forward P/E of 10.57 remains substantially below the 43.44x semiconductor industry average. The stock’s price-to-earnings-growth ratio of 1.12 looks attractive compared to Samsung’s 3.31.
A proprietary fair P/E calculation of 63.06x exceeds Micron’s current P/E of 38.91x. This metric suggests shares trade below fair value when accounting for growth rates and company fundamentals.
Recent Trading and Outlook
Shares gained 7.3% over the past week, 13.5% over 30 days, and 30.5% year-to-date through the latest close. Market capitalization reached $463 billion with average trading volume of 33 million shares daily.
Wall Street analysts project free cash flow expanding to $20.38 billion by 2030 from the current $5.84 billion over the trailing 12 months. These forecasts underpin both optimistic and cautious investment theses.
The stock’s 52-week range extends from $61.54 to $455.50. Current dividend yield stands at 0.11% while gross margin measures 45.53%.
Micron meets 3 of 6 criteria for undervaluation screening. The split verdict captures ongoing debate between traditional discounted cash flow models and growth-adjusted valuation multiples as the market weighs AI memory opportunity against elevated share prices.
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