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Micron Technology has quietly become one of the best-performing stocks in the entire S&P 500. And somehow, it’s also one of the cheapest.
The numbers behind the rally
Micron’s stock has gone on an extraordinary run, climbing from lows around $90 in late 2025 to levels exceeding $750. The company’s market capitalization now sits near the $800B to $1 trillion range, placing it among the largest public companies in the US.
The fuel behind this ascent is straightforward: artificial intelligence needs memory, and Micron makes memory. Specifically, the company has benefited enormously from surging demand for high-bandwidth memory (HBM) and DRAM chips, the essential components that power the data centers where AI models are trained and deployed.
Fiscal 2025 revenue hit $37.38B, a significant jump from $25.11B the prior year. GAAP net income came in at $8.54B. One quarterly report showed revenue increasing 196% year-over-year.
S&P Global Ratings upgraded Micron’s credit rating to BBB in February 2026, citing a strong balance sheet and expectations of substantial cash building in fiscal 2026.
The valuation paradox
Despite all of this, Micron trades at a forward price-to-earnings ratio of approximately 4.5x. The S&P 500 average sits around 20x. The IT sector average is 21.1x.
Wall Street has noticed. KeyCorp set a price target of $450, and Bank of America pegged theirs at $400. Analyst price targets across the board were revised upward significantly in early 2026.
Memory semiconductors are one of the most cyclical corners of the tech industry. Prices for DRAM and NAND flash swing dramatically based on supply and demand dynamics. When supply tightens, as it has recently, margins expand and earnings spike. When capacity floods back in, margins collapse, and those monster earnings evaporate.
A 4.5x forward P/E looks absurdly cheap if you believe these earnings are sustainable. It looks perfectly rational if you think they’re about to fall off a cliff.
Why this cycle might be different, and why it might not
The bull case rests on AI being a structural, not cyclical, demand driver. Unlike previous memory booms driven by smartphone upgrades or PC refresh cycles, AI infrastructure spending shows no signs of slowing. The appetite for HBM specifically is growing faster than the industry can add capacity.
Tightening memory supply combined with consistent DRAM and NAND pricing has given analysts confidence that Micron’s earnings trajectory has legs. Revenue growth has been sustained across multiple periods, and the credit upgrade suggests institutional confidence in the company’s financial position.
The bear case is simpler but no less compelling. Memory is a commodity business. Samsung and SK Hynix are not sitting idle. As margins expand, competitors invest in new capacity. That new capacity eventually hits the market. Prices fall. Margins compress. The cycle repeats.
The key variable is whether AI-driven demand for memory represents a permanent shift in the industry’s cyclical dynamics, or just a longer-than-usual upcycle that eventually reverts to the mean.
The smart move is probably to watch DRAM and NAND pricing data closely over the coming quarters. As long as memory prices hold firm, Micron’s earnings power remains intact and the valuation gap stays attractive. The moment pricing starts to soften, a stock trading at 4.5x earnings can still lose half its value if those earnings get cut in half first.
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