Alex
Canadian Dividend Investor, Founder of The Profit Zone/Profit Academy
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
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.comÂ
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.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'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
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.comÂ
Micron faces a severe crash risk from CXMT's current threat and apparent investor complacency after a euphoric high. If the Wall St Cheat Sheet fits, most of Micron's gains across 40 years, amassed in just one year, could be erased soon. Earlier, Elon Musk said Micron had been reasonable on future memory prices; memory stocks were not yet to be faded. 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
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.comÂ
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.comÂ
Micron may merit 10x next year's earnings, perhaps a $2,000 share-price target rather than D.A. Davidson's $3,000, on the firm's case that AI and memory demand could support three to five years of growth. x.comÂ
