Oliver | MMMT Wealth
Founder of MMMT Wealth, CPA, Technical/Fundamental Analysis
Micron remains one of the more mispriced stocks in the market because it is no longer a cyclical business. Gross margins of 87%, $33B of free cash flow at a 61% margin and $68B of cash against $5B of debt mark a quality company. If EPS stays at the Q1 forecast, FY27 EPS of $153 puts the stock at 7x, versus about 21x for the S&P 500. That quality matters less if the spike is short-term, but memory demand is growing in both training and inference. Davidson just raised its target to $3,000. x.comÂ
Micron's ordinary memory could see tighter supply because HBM consumes far more factory capacity than conventional DRAM. Meeting AI demand could thus extend Micron's opportunity beyond AI memory. x.comÂ
Micron's bet on 3D DRAM over rivals' 4F2 could give it an edge as AI memory demand rises. Micron expects shortages for at least two more years: HBM per GPU rose 3.6x from H100 to B300, inference memory per server doubled in three years, and agent context grows about 30x annually. It plans further 6F2 nodes, 1-delta DRAM in 2H27 and 400-plus-layer G11 NAND in 2027; processor-stacked vHBM is targeted around 2028. If Micron is right, rivals are spending on the wrong path. Overweight Micron. x.comÂ
Networking, power and compute look more durable than cyclical memory in the AI buildout. Lumentum's revenue compounded year after year across the 2010s and 2020s, unlike Micron's; AWS revenue also compounded. Lumentum, Nebius, Bloom Energy and Credo should heavily outperform SanDisk and Micron from here, though AI itself remains heavily doubted. x.com x.comÂ
Micron and SK hynix pricing in a memory shortage past 2030 extends the memory-cycle case beyond the Street's 2028 expectation. SK hynix's record quarter adds evidence: per Wall St Engine, revenue rose 328% to $78.9B, operating profit rose 632% to $62.8B, and operating margin hit 80%. Agentic and physical AI could add demand as they roll out. x.com x.comÂ
Micron's AI memory-chip sales and accelerating growth support its upside case. Its 3.3/5 WATCH rating reflects a business with 60% of sales from cloud and data-center chips, 64 cents of profit per sales dollar and 256% sales growth last year. At the Oct. 15 close of $878.84, it traded about 42% below estimated fair value of $1,512.34. The case needs strong sales growth and expanding margins and cash flow; slower growth or a price outrunning the business are warning signs. x.comÂ
Inflation, rising rates, Chinese competition and rising AI-related financial costs are pressuring the memory market. Micron, Samsung and SK hynix look exposed; waiting for the cycle to turn. x.com x.comÂ
Micron is riding the AI memory supercycle: HBM for AI accelerators is sold out and prices are exploding, turning a former commodity price-war player into the hottest shovel-seller in the AI gold rush. From Q4 FY25 to Q4 FY26, revenue rose 379% to $54.2B, operating income rose about 12x to $43.8B, and EPS jumped from $2.86 to $33.36. x.comÂ
Micron's AI-driven cash generation looks outsized for its size amid market concern about debt risk. Its quarterly free cash flow has reached about $32.9B in under two years, above the peak quarters shown for Meta, Amazon, Google and Microsoft; only Nvidia and Apple have posted higher quarters, despite each being about five times Micron's size. x.comÂ
China's domestic market lets YMTC and CXMT threaten Micron, Samsung Electronics and SK hynix without entering US products. China receives 15-25% of smartphones and PCs and is on a path to at least 20-30% memory share over the next several years; current leaders are much too optimistic. History suggests at least a near-term semiconductor rally even if the AI trade has topped. It likely has not: agentic AI should give the trade room to run into 2027. x.com x.com x.comÂ
Improving earnings and more attractive valuations favor AI infrastructure names Nvidia, Micron, Broadcom and TSMC. Goldman Sachs charts put memory stocks at about 4 times two-year forward earnings versus an 8 times median, and large fabless chip stocks at about 13 times versus 18 times. x.comÂ