Does Micron Technology Stock Have More Upside?
Micron Technology (MU) stock is at an interesting point right now. It has strong momentum, and if you bet on it, you are betting on a company with a strong margin, good cash flow, a low-debt capital structure, and good tailwinds. But is that enough?
Why Bet On MU Now?
Micron is capitalizing on a structural, AI-driven demand surge for High-Bandwidth Memory (HBM), which is creating a severe supply-demand imbalance across the memory industry. This allows for a significant positive mix shift towards higher-margin HBM products and grants the company substantial pricing power, leading to rapid revenue acceleration and margin expansion.
- The High-Bandwidth Memory (HBM) TAM is projected to grow at a ~40% CAGR, reaching $100 billion by 2028.
- Micron’s entire 2026 HBM supply is sold out under contract with set pricing, providing high revenue visibility.
- Company guidance for Q2 2026 includes a gross margin forecast of ~68%, representing significant expansion.
- DRAM prices rose approximately 20% in the last reported quarter alone, indicating a strong pricing environment.
How Do The Fundamentals Look?
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- Long-Term Profitability: About 33.9% operating cash flow margin and 3.1% operating margin last 3-year average.
- Strong Momentum: Currently in the top 10th percentile of stocks in terms of “trend strength”—our proprietary momentum metric.
- Revenue Growth: Micron Technology saw revenue growth of 45.4% LTM and 28.3% for the last 3-year average, but this is not a growth story
- Room to Run: Despite its momentum, MU stock is trading 3.8% below its 52-week high.
Below is a quick comparison of MU fundamentals with S&P medians.
| MU | S&P Median | |
|---|---|---|
| Sector | Information Technology | – |
| Industry | Semiconductors | – |
| PS Ratio | 11.2 | 3.3 |
| PE Ratio | 39.8 | 25.1 |
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| LTM* Revenue Growth | 45.4% | 6.5% |
| 3Y Average Annual Revenue Growth | 28.3% | 5.4% |
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| LTM* Operating Margin | 32.5% | 18.8% |
| 3Y Average Operating Margin | 3.1% | 18.2% |
| LTM* Op Cash Flow Margin | 53.6% | 20.7% |
| 3Y Average Op Cash Flow Margin | 33.9% | 20.2% |
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| DE Ratio | 2.6% | 20.7% |
*LTM: Last Twelve Months
The Bear View & The Current Investment Debate
The current investment debate on MUis centered around: Can Micron’s sold-out HBM capacity and pricing power overcome the risk of being technologically leapfrogged by competitors in next-generation AI platforms?
The prevailing sentiment is bullish. The AI-driven super-cycle is overwhelming all other factors. Record guidance, accelerating growth, and extreme pricing power create a powerful tailwind. Competitive risks are significant but futuristic; the current cash flow is undeniable.
| Bull View | Bear View |
|---|---|
| An unprecedented, AI-driven supply shortage grants Micron extreme pricing power and visibility, leading to record revenue and margins through 2026. | Competitors (SK Hynix, Samsung) are securing dominant positions in next-gen HBM, risking Micron’s exclusion from key AI platforms like Nvidia’s ‘Rubin.’ |
You can evaluate more on which view to bet on by visiting MU Investment Highlights & Full Analysis
MU Is Just One of Several Such Stocks
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We chose these stocks using the following criteria:
- Greater than $2 Bil in market cap
- High operating (or cash flow from operations) margins
- Low-debt capital structure
- Strong momentum
A portfolio that was built starting 12/31/2016 with stocks that fulfill the criteria above would have performed as follows:
- Average 12-month forward returns of nearly 15%
- 12-month win rate (percentage of picks returning positive) of about 60%
Portfolios Over Individual Stock Picks
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