Mike
Investor, Creator of HiddenSmallCaps
Micron's earnings boom will likely draw ever-lower multiples because new memory supply is coming fast and the cycle ultimately ends in a glut. Micron just quadrupled its capex guidance to above its revenue guidance, and hyperscalers will likely enter memory themselves. Demand should stay very high as AI usage is still early, so Micron is unlikely to tank and isn't a great short, but pricing should slowly decline and investors will rarely pay more than 10x earnings. x.com x.com x.com
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.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
If Micron has only two years of decent forecasts, its limited visibility warrants a lower multiple, not a higher one. 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 looks like a bargain at about 5x forward earnings with 380% sales growth and net profit up 11x, in an AI compute environment where every data point is extremely bullish. A quoted post cites OpenAI nearing $70B in ARR, AI agents becoming a new secular demand driver, record Korean memory-chip exports, and Micron's big beat-and-raise with demand extending another year. 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's dip is a generational opportunity to buy a great company at a discount. Revenue is up about 25% year on year on AI-driven demand, and the stock trades at about 14-16x forward earnings. At $939 now, it is a $1,200 stock. x.com
Each new AI wave is lifting demand across Micron's HBM, DRAM and storage products. Micron said training, inference, agentic AI and physical AI raise memory needs; the stock still trades at about 5x next-twelve-month earnings, leaving its growth story just getting started. x.com
Micron's move is parabolic and should see a 50% or larger correction over the next few years. The stock has hit its 1.618 Fibonacci extension from the 2000 high at $1,200+, an 18x return in under 18 months and 120x in 10 years, with many speculators chasing it. Much of the rally is earnings driven, but the market is already pricing in future growth, and price can stay irrational for a while. Holders should trim 50-65% or sell in-the-money covered calls out to end-2027 or early 2028. 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