Micron (MU) Stock Soars on AI Memory Shortage But Valuation Debate Heats Up

TLDR

• Micron Technology (MU) stock climbed 315% over 12 months as AI memory demand creates supply shortage expected to last until 2028
• First quarter fiscal 2026 revenue jumped 57% to $13.6 billion with DRAM representing 79% of sales and net margin at 28.15%
• Company broke ground on $100 billion New York semiconductor factory and exited consumer PC market to focus on AI memory
• Stock trades at $411.66 with forward P/E of 10.57 versus industry average of 43.44x
• DCF analysis values shares at $189.89, suggesting 116.8% overvaluation despite attractive growth multiples

Micron Technology stock has exploded 315% over the past year as artificial intelligence applications drive unprecedented memory chip demand. Shares closed at $411.66, though diverging valuation metrics leave investors debating whether the rally can continue.

Micron Technology, Inc., MU

The company controls the memory hardware market alongside Samsung and SK Hynix. These three manufacturers supply virtually all DRAM and RAM chips globally. AI’s insatiable appetite for memory has created shortages that Intel CEO Lip-Bu Tan believes will persist through 2028.

RAM prices are projected to surge 50% in the first quarter of 2026 alone. This pricing power flows directly to Micron’s financial results.

Revenue and Margins Accelerate

Fiscal 2026 first quarter revenue reached $13.6 billion, up 57% year-over-year. DRAM sales accounted for 79% of the total, confirming AI as the primary catalyst. Gross margin hit 56.8% while net margin reached 28.15%.

The Boise-based chipmaker exited the consumer PC market in late 2025 to concentrate exclusively on AI memory production. Management’s decision reflects confidence in sustained infrastructure demand from technology companies.

Micron broke ground on a $100 billion semiconductor manufacturing plant in upstate New York last month. The facility will employ more than 9,000 workers and become America’s largest chip factory when operational.

Valuation Signals Conflict

A discounted cash flow model pegs Micron’s intrinsic value at $189.89 per share. At current prices, the stock trades 116.8% above this DCF estimate, suggesting shares appear overvalued on fundamental cash flow projections.

Multiple-based analysis tells a different story. The stock’s forward P/E ratio of 10.57 sits well below the semiconductor industry average of 43.44x. Micron’s PEG ratio of 1.12 compares favorably to Samsung’s 3.31.

A calculated fair P/E of 63.06x exceeds Micron’s actual P/E of 38.91x. This gap indicates shares screen as undervalued when factoring in growth expectations and company-specific characteristics.

Market Performance and Projections

The stock gained 7.3% over seven days, 13.5% over 30 days, and 30.5% year-to-date. Market capitalization stands at $463 billion with average daily volume of 33 million shares.

Analyst forecasts project free cash flow expanding to $20.38 billion by 2030 from $5.84 billion in the latest 12-month period. These estimates support both bullish and cautious investment cases.

The 52-week trading range spans $61.54 to $455.50. Dividend yield sits at 0.11% with gross margin at 45.53%.

Micron scores 3 out of 6 valuation criteria for being undervalued. The mixed assessment reflects tension between traditional DCF models and growth-adjusted multiples as investors weigh AI memory opportunity against current share prices.

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