Vlad Bastion
Founder of Investment Bastion, Systematic Stock Ratings & Algorithmic Portfolios
Micron trades at 7x forward earnings, below its 11x 10-year median, because the market is pricing a cycle peak that does not look close. Revenue of $54.2B beat the $50.5B expected, and guidance of $61.5B topped $56.8B. Over 75% of 2027 output is contracted, customer agreements rose to 26 from 16, and management expects worse shortages in 2027-28; price bands on most contract revenue set a floor and cap upside. Consensus FY2027 FCF of $117B, a 9.8% yield, exceeds higher capex. x.com
Micron is the cheapest US mega cap by Deep Value score, trading at just 6x forward earnings because the market is betting today's profits won't last. Take-or-pay contracts meant to soften the memory boom-bust cycle cover only about a quarter of revenue. The real test comes in 2028 and 2029, as Micron, Samsung and SK Hynix all invest heavily in new fabs and HBM: growing AI demand would absorb that capacity, while slower growth could bring oversupply and falling prices. 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 can't meet customer demand, giving it rare visibility at a valuation of about 5x next year's earnings. CEO Sanjay Mehrotra said customers are extending agreements into 2031, which gives certainty of demand and lets Micron plan capacity investments with confidence. The stock is now about $1,000, and with potential EPS beats over the next few quarters its forward P/E could be around 5, unthinkable about six months ago. x.com x.com
Micron's own guidance suggests the memory recovery comes later than consensus thinks. Its CFO guided to rising margins through fiscal 2027 alongside a more moderate pace of price increases, and Micron said it has no line of sight to when supply and demand will return to balance. x.com x.com
Micron looks very cheap because the market underestimates how sustainable its earnings will be over the next few years. x.com
Micron's memory boom looks set to last longer than anyone thought, because it has locked in 16 long-term supply deals guaranteeing about $100 billion in revenue. Micron said fixed-price or price-capped deals near current levels should be about 40% of revenue, with price floors enabling gross margins well above any past peak. Management believes this AI cycle can keep memory prices high through at least 2030. If so, at 9x 2027 adjusted EPS of $135, Micron still looks cheap at about $1,220. 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 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
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.com
If Micron has only two years of decent forecasts, its limited visibility warrants a lower multiple, not a higher one. x.com
Micron's surging memory revenue points to a supercycle. Its segment and NAND revenue charts show a sharp recent acceleration, while the stock tests its rising 30-week average. x.com
