GrowthTurtle
Data Science PhD & IEEE Fellow, Ex-Two Sigma
Microchip Technology looks cheap at 16x earnings versus the roughly 38x chipmakers usually get. Applying 38x to next year's forecast EPS of $4.57, give or take 12%, puts fair value at $152.66-194.29, and the stock at $74.17 trades 51% below the low end, with a 0.21 PEG. That leans on forward earnings 185% above trailing; above $97.02 it would be expensive. This is a valuation read only, not fundamental work. x.comÂ
AI skepticism leaves Nvidia, Broadcom and Micron looking cheap on forward earnings. Their forward P/E ratios are 14, 18 and 5, respectively; the market may eventually stop doubting AI. x.comÂ
Micron looks very cheap because the market underestimates how sustainable its earnings will be over the next few years. x.comÂ
Microchip is the weak link in the analog theme, a poor-quality company next to Texas Instruments and Analog Devices. Last year it posted a loss of about $500,000 on $4.4 billion in revenue. x.comÂ
Semiconductors are now cheaper than the broader market on forward earnings, provided earnings cuts do not undermine that discount. The sector's forward P/E is about 17 versus roughly 18.6 for the S&P 500. x.comÂ
Semiconductor and memory stocks still look cheap despite the panic on forward earnings and growth-adjusted valuations. SK hynix trades at 4.4x forward earnings with a 0.04 PEG, Micron at 4.6x and 0.11, Sandisk at 5.5x and 0.10, and Nvidia at 14.2x and 0.22; the table extends across chipmakers and suppliers. Some of these figures may reflect peak earnings. x.com x.comÂ
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.comÂ
AI stocks differ from the dot-com bubble because earnings are showing up, compressing valuations. Nvidia trades at 19.4x forward with 43% FY27 EPS growth, a 0.46 PEG. SanDisk, at 12.4x, grew revenue 251% and repaid all debt. Hewlett Packard Enterprise trades at 11.3x with GreenLake ARR up 63%. Super Micro, at 9.8x with a $39B backlog, is the highest risk given DOJ and Taiwanese probes. Micron, at 8.1x with $22B of take-or-pay contracts locked, is the steepest discount. x.com x.com x.com x.com … Show more
Texas Instruments could command a P/E in the high 20s for FY2026, given strong EPS guidance of about $2 and a very bullish backdrop for microcontrollers, power electronics such as GaN and DC/DC, and analog chips for the AI data-center ramp. x.comÂ
Strong-growing chipmakers on lower forward multiples can deliver great returns: Micron at about 12x forward earnings, Lumentum at 18x, Marvell at 22x, NVIDIA at 23x and Broadcom at 25x. Peers such as Arm at 55x, Intel at 48x and AMD at 38x trade far higher. x.comÂ
