Anyone who invested in Micron (NASDAQ:MU) across virtually any timeframe over the past year has seen strong returns, underscoring just how momentous the stock’s run has been. Overall, shares of the memory giant have surged about 714% during that period.
Meet Samuel – Your Personal Investing Prophet
- Start a conversation with TipRanks’ trusted, data-backed investment intelligence
- Ask Samuel about stocks, your portfolio, or the market and get instant, personalized insights in seconds
Yet, despite that massive rally, MU still trades at a relatively modest 13.7x FY26 earnings. According to investor Bernard Zambonin, that valuation suggests the market continues to view stock through a largely cyclical lens.
In most cases, a company trading at a low multiple reflects the market’s limited confidence in the durability of its earnings. A high P/E generally signals investors believe profits can remain strong for years, while a low P/E suggests earnings could decline just as quickly as they rose.
Based on current consensus estimates for Micron, the compressed valuation appears likely to persist only through roughly FY28. Beyond that, because confidence in the sustainability of earnings remains limited due to the memory industry’s cyclical nature, projected FY29 and FY30 earnings imply the P/E could climb toward ~20x levels, valuations that look far less typical for a traditional memory-cycle stock.
But Zambonin thinks a legitimate question to ask now is whether Micron’s earnings power has “permanently changed.”
Memory is no longer just a low-cost server component and has become critical to AI, as workloads like agentic AI, long-context inference, and real-time reasoning are increasingly constrained by memory capacity and bandwidth rather than raw compute alone.
Micron also noted that AI demand is expected to push data center DRAM and NAND above 50% of industry TAM for the first time in calendar 2026. That is important for the thesis because it signals the memory market is shifting away from its traditional dependence on PCs and smartphones toward a more strategic hyperscaler-driven mix. As a result, Micron’s earnings profile could become structurally stronger, supported by higher-value products like HBM, enterprise SSDs, and data center memory instead of commoditized consumer memory.
Nevertheless, Wall Street still appears to underestimate Micron’s potential to reach a $1 trillion market cap, with fair value estimates sitting closer to ~$642 billion. While the market already values the company at roughly $864 billion, Zambonin thinks the “structural base case points to the possibility of $1 trillion or more.”
If AI has effectively turned memory into a strategic part of the computing stack and Micron can sustain owner earnings of around $80–90 per share, which looks plausible to Zambonin based on projections for the next couple of years, then a $1 trillion valuation would equate to only about 10x–12x owner earnings.
“And that’s a multiple that I see as perfectly reasonable for a business with structurally higher and more predictable earnings power, supporting my Buy rating on Micron stock,” the 5-star investor summed up. (To watch Zambonin’s track record, click here)
The Street’s overall take on Micron offers something of a conundrum right now. On the one hand, the stock carries a Strong Buy consensus rating, based on a mix of 27 Buys and 3 Holds. However, the $608.33 average price target implies the shares are overvalued by ~22%. With this in mind, it would not be surprising to see some revisions soon. (See MU stock forecast)
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.