Micron is the only large U.S. maker of memory chips, and the AI boom has turned memory from a commodity into the scarcest part of a data center. Revenue more than tripled to $133 billion last year at an 87% gross margin by the end. The question is how long a famously cyclical industry can stay this tight.
Today’s close against the report’s numbers, updated every weekday. The analysis is as of October 21, 2026; the rating as of October 22, 2026. Both change only when the report is revised.
The cycle model’s bear-to-bull range, the probability-weighted value, the price, its 52-week range and the analysts’ consensus target. The copper line marks the base case; the fine dotted line is today’s close.
Written on October 21, 2026, after record fiscal 2026 results. Figures are from the company’s filings and releases unless noted. Not investment advice. The author holds no MU shares directly; Micron is held inside the VanEck Semiconductor ETF (SMH) in the author’s portfolio.
Micron makes the two main kinds of memory. DRAM (73% of last quarter’s revenue) is the working memory in every computer, and includes HBM, the stacked memory that sits next to each AI accelerator. NAND (26%) stores data in phones, PCs and data center drives. Only three companies make DRAM at scale: Samsung, SK Hynix and Micron.
AI changed the industry in two ways. HBM uses about three times the silicon of ordinary DRAM for each bit, so making it takes capacity away from everything else; and AI servers need far more memory of every kind. The result is a shortage that Micron expects to be “much tighter” in fiscal 2027 and 2028 than in 2026.
Fiscal 2026 (to September 3) brought revenue of $133.2 billion, up 256%, and net income of $85 billion. In the fourth quarter DRAM prices rose in the high teens and NAND prices about 30% from the quarter before. For the first quarter of fiscal 2027 Micron guided to $61.5 billion of revenue, an 86.25% gross margin and $38.15 of adjusted earnings per share; it plans to step up buybacks from December.
Micron has also changed how it sells. It has signed 26 multi-year agreements with take-or-pay volumes, expected to cover more than 35% of revenue through 2030, with about $150 billion of remaining obligations at set prices and $32 billion of customer prepayments. More than 75% of 2027 output is already committed.
| FY2022 | FY2023 | FY2024 | FY2025 | FY2026 | |
|---|---|---|---|---|---|
| Revenue | $30.8B | $15.5B | $25.1B | $37.4B | $133.2B |
| Operating margin | 31.5% | −37.0% | 5.2% | 26.1% | 74.6% |
| Net income | $8.7B | −$5.8B | $0.8B | $8.5B | $85.0B |
| Operating cash flow | $15.2B | $1.6B | $8.5B | $17.5B | $89.7B |
| Capital spending | $12.1B | $7.7B | $8.4B | $15.9B | $30.7B |
| Free cash flow | $3.1B | −$6.1B | $0.1B | $1.7B | $59.0B |
The table is the case for caution in one picture. In fiscal 2023 revenue halved and Micron lost $5.8 billion; three years later it earned $85 billion. Memory prices move with supply and demand, and every past boom has ended with new factories coming online and prices falling. Capital spending rises with the cycle too: about $25 billion in the first half of fiscal 2027 alone.
Micron ended fiscal 2026 with $68.3 billion of net cash. Its new capacity arrives in steps: Idaho ID1 in mid-2027, ID2 and a Japan DRAM expansion in late 2028, a Singapore NAND plant in the second half of 2028 and the first New York fab in 2030. Samsung and SK Hynix are expanding too. Morningstar, which cut its fair value to $700, expects industry supply to roughly double by 2028 and prices to fall steeply from 2029.
A single year’s earnings is the wrong base for a memory maker, so this model values the cycle: free cash flow for fiscal 2027–2030 at each scenario’s prices, then an exit value on mid-cycle earnings, all discounted at 14% (beta 2.0 gives a CAPM cost of about 14.3%), plus net cash, over about 1.10 billion shares after buybacks.
| Bear | Base | Bull | |
|---|---|---|---|
| Revenue, FY2027 / FY2028 | $220B / $200B | $250B / $280B | $290B / $350B |
| Revenue, FY2029 / FY2030 | $130B / $110B | $200B / $150B | $330B / $300B |
| Free cash flow, four years | $211B | $360B | $678B |
| Mid-cycle revenue and operating margin | $130B at 25% | $170B at 35% | $280B at 45% |
| Exit multiple | 10× | 12× | 14× |
| Value per share | $356 | $622 | $1,266 |
| Probability | 25% | 50% | 25% |
Weighted 25/50/25: $717. The base case follows management’s view (tighter through fiscal 2028) and then the usual turn as new supply arrives. Even the bear case stays well above anything Micron earned before AI.
Every figure in this valuation comes from one model script, rerun and checked against this page each time the site is built. The XLSX model rebuilds it in live formulas: change any blue input and every year’s cash flow, the bridge to the value, the scenarios and the sensitivity table recalculate.
| To justify the price, you need | Against |
|---|---|
| About $92 billion of after-tax profit a year from 2031, valued at 12×, after the base case’s cash flows | Fiscal 2026 net income was $85 billion, at the start of the boom |
| Or the bull case’s four-year boom with a higher exit | Supply stays short through 2030 |
The price is between our base and bull cases. Analysts are much more optimistic: their consensus target is about $1,555, and the stock trades at about 7 times next year’s expected earnings. That multiple looks cheap only if next year’s earnings are close to normal, which memory history argues against.
| Risk | Why it matters |
|---|---|
| The cycle | New fabs at Micron, Samsung and SK Hynix arrive from 2027–2028; prices have always fallen when they do. |
| AI spending | Fears of AI overbuilding cut the shares 26% in July; hyperscaler capex growth is expected to slow. |
| Customer concentration | Data centers are about 60% of revenue and a handful of buyers dominate. |
| China | Beijing barred some infrastructure operators from buying Micron chips in 2023. |
| Capital spending | Higher capex and depreciation will weigh on margins as prices ease. |
Upside: long-term agreements that keep prices high for longer, HBM4 and custom HBM with Nvidia, and buybacks from a cash pile of nearly $70 billion.
Micron is executing well in the tightest memory market on record, and long-term agreements make this cycle steadier than past ones. The price assumes today’s profit lasts well beyond 2028.
What would change the value: The first signs of new supply, contract prices for 2027 and the December results would move the value most.
Ranges, not three cases. The expected value is the average of 4,000 runs of this report’s own model, with every input drawn from a range: the base case is the middle, and the bear and bull cases are the 10th and 90th percentiles. Business inputs move together; the discount rate moves on its own. The 25/50/25 weighting in the valuation section gives $717. How the ranges work
Two different questions. The rating is relative: it asks whether the stock is cheaper or dearer than the S&P 500 on the same assumptions. The absolute view asks whether it is worth its price at all: on its own the stock trades above our estimated value, which is 22% below the price.
On the same assumptions every report uses (a 5.15% Treasury yield and a 4.5% equity premium), the S&P 500 itself is worth about 68% of its price. The rating compares each stock with that: Buy if it is at least 15% cheaper than the market on this basis, Sell if at least 15% dearer, Hold in between. It is the same rule for every company, whoever owns it. The rating depends on that assumption: it would be Buy if the index grows 6% a year and Hold at 10%, against 8% here. How ratings work
Against the Street: Analysts average about $1,555 and use about 7 times next year’s earnings. This model instead values the whole cycle, with prices falling back to a mid-cycle margin of 35% from 2029, which is the main source of the gap.
| Measure | Micron Technology | Industry median | Rank | |
|---|---|---|---|---|
| Revenue growth, last fiscal year | 256.3% | 15.3% | 1 of 15 | Better than the median |
| Operating margin | 74.6% | 26.0% | 1 of 15 | Better than the median |
| Price to earnings | 12.4× | 46.4× | 2 of 14 | Better than the median |
| Free cash flow yield | 5.6% | 2.5% | 2 of 15 | Better than the median |
Peers: the 14 other S&P 500 companies in Semiconductors with complete data (ADI, AMD, AVGO, FSLR, INTC, MCHP, MPWR, MRVL, NVDA, NXPI, ON, QCOM, SWKS, TXN). Last twelve months where reported, from SEC filings; prices from the latest close. A lower price-to-earnings ratio ranks higher. These figures update with each data run; the rating does not.
Every past boom ended with new supply; this one has a later date, not a different ending.
| What | Figures | Source |
|---|---|---|
| Latest results | $54.2B (Revenue, Q4 FY2026, +31% on Q3), 86.8% (Gross margin), $37.7B (Net income), $33.2B (Free cash flow) and others | Q4 FY2026 results; Earnings call |
| The numbers (five-year table) | Five years of annual figures and the last twelve months | SEC XBRL company facts; latest: 10-K for the period to 2026-09-03, 10-Q for the period to 2026-05-28 |
| Price at writing | $913.67 (Close, Oct 21, 2026) | Yahoo Finance; the time of the quote is stated beside the price |
| Discount rate inputs | 10-year Treasury 5.15%, equity risk premium 4.5% | Fixed for every report so they can be compared; How ratings work |
| Valuation | Every value, case and sensitivity | This site’s model: XLSX, CSV |
| Checked by hand | Not yet | Reports are added to the audit log as they are revised |
| Input | Bear (10th percentile) | Base (median) | Bull (90th percentile) |
|---|---|---|---|
| Revenue path | $220B/$200B/$130B/$110B | $250B/$280B/$200B/$150B | $290B/$350B/$330B/$300B |
| Free-cash-flow margin path | 50.0%/38.0%/15.0%/5.0% | 55.0%/50.0%/30.0%/15.0% | 58.0%/58.0%/52.0%/45.0% |
| Normal-year revenue | $130B | $170B | $280B |
| Normal-year margin | 25.0% | 35.0% | 45.0% |
| Exit multiple | 10× | 12× | 14× |
| Simulation result | |
|---|---|
| Expected value (average of 4,000 runs) | $713.06 |
| Likely range, 10th to 90th percentile | $396.30 to $1,119.61 |
| Median | $641.66 |
| Chance the value is above the price | 21% |
| Chance it is cheaper than the S&P 500 | 54% |
Each input is drawn from a split normal: its bear and bull values are the 10th and 90th percentiles, so the two sides can differ. Business inputs share a common factor (correlation 0.6); the discount rate is the same in every case, so it is not drawn. Inputs not listed are held at their base value. How the simulation works.