From Growth To Value
Founder of Potential Multibaggers/Best Anchor Stocks
Micron hasn't reached peak margins: this quarter showed it wasn't at a peak before, and it can meet only half to two-thirds of demand. HBM is a higher-quality business than its legacy memory, and Micron is the only American company with that capacity, alongside Korea's SK Hynix and Samsung. It is not a long-term holding because the cycle could turn ugly; the red flag would be a DeepSeek-style moment of extreme memory-efficiency gains, which some developments hint at but haven't arrived. x.com x.com
Micron's sold-out high-bandwidth memory through 2027+ and contracts already being signed for 2029-2030+ extend its earnings runway. At 5x forward earnings, it is cheaper than a year ago; its private Anthropic stake is about to be instantly rerated at Anthropic's IPO, and a new share buyback is expected to be announced Dec. 9. Micron could certainly gain 30% in three months. x.com x.com
Micron's revenue grew faster than its stock over the past year, leaving it cheaper on trailing earnings. Quarterly revenue rose from $11.3B to $54.2B, while the stock rose from about $198 to $878 and trailing P/E fell from roughly 24x to 11.6x. x.com
Micron looks expensive on price-to-book at about 8x versus a historical average of about 2x, and relying on forward P/E for such a cyclical business can be dangerous. x.com
Micron's FY2028 earnings could substantially exceed the displayed $206.89 normalized EPS estimate, leaving the shares at about 3x FY2028 EPS. A beat of at least 30-50% depends on demand, pricing, margins and buybacks. x.com
Micron is a complete bargain at just 12x the most conservative estimate of its FY2027 free cash flow, supporting a $1,800 price target for the end of 2027. If it delivers anything close to the $100 billion of FCF expected, today's price should look like a massive opportunity in hindsight. The shares are down 13% over three months despite a very strong report. x.com
If Micron has only two years of decent forecasts, its limited visibility warrants a lower multiple, not a higher one. x.com
Demand for Micron's products is through the roof, making its revenue surge only the beginning as it heads into 2027. The attached eight-quarter chart puts Q4 FY26 revenue at $54.2 billion, and Micron's gross margin is cited at 86%. A $100 billion revenue quarter could arrive in the not-so-distant future; the stock is a good bet here. x.com
Micron's valuation looks ridiculous given the street's eight-year EPS estimates, even with a projected 2028 earnings peak and subsequent decline. At under $900, it trades at 5.09 times this year's expected EPS of $176.55. If consensus plays out, 2027-34 EPS would total $921.56, more than the share price; if analysts are wrong about when EPS peaks, Micron would look even cheaper. x.com
Micron's projections are set so high that even great years may not be enough to meet them. Samsung's Q3 results show the risk: revenue of $145.6B missed the $150.7B estimate, and operating profit of $80.2B missed $81.1B. x.com
Micron expects stronger demand in 2027 and 2028 than in 2026, yet the stock trades at only 10x 2026 EPS. Micron said it expects memory and storage supply-demand conditions to be much tighter in 2027 and 2028 than in 2026, which points to record years ahead. x.com