Why Micron (MU) Remains Undervalued Despite a 300% Rally

Throughout the trailing twelve-month period, MU shares have soared from the low-$60 range to approximately $430. This represents roughly a 300% appreciation. Paradoxically, the forward non-GAAP P/E multiple has contracted to approximately 12.4 — nearly 50% below sector benchmarks — as earnings projections have accelerated beyond even the aggressive stock price movement.

The PEG ratio reinforces this narrative. Currently sitting around 0.21, compared to a sector median approaching 1.5, the market appears to discount the sustainability of Microns growth trajectory.

Analyst consensus paints a different picture. Fiscal 2026 revenue projections call for $76 billion, representing more than a doubling from the previous fiscal year. Earnings per share are anticipated to leap from $7.59 in fiscal 2025 to $33.92 in the current year — approaching a four-fold expansion. Notably, every single analyst revision over the past ninety days has trended upward — all 28 of them.

For the second quarter of fiscal 2026, consensus estimates cluster around $18.7–$18.9 billion in revenue, approximately 135% above the year-ago period, with non-GAAP EPS expectations near $8.50 — suggesting 445% year-over-year expansion.

Supply Is the Constraint, Not Demand

The supply-demand dynamics are remarkably clear-cut. HBM inventory is completely committed through 2026 under fixed pricing and volume agreements. DDR5 spot market prices have climbed approximately 30% year-to-date, while DRAM and NAND contract pricing has added another 30% in early 2026.

Certain hyperscale customers are reportedly receiving merely half to two-thirds of their requested memory allocations. This dynamic provides Micron with substantial pricing leverage and strategic allocation flexibility toward premium-margin customers.

The addressable market for HBM specifically reached $35 billion in 2025 and is projected to expand at a 40% compound annual growth rate through 2028, positioning it to approach $100 billion before decades end.

Microns Cloud Memory Business Unit — encompassing HBM and premium data-center DRAM products — delivered gross margins near 66% in Q1 fiscal 2026. Corporate-level gross margin reached 56.8% in Q1, with management guidance calling for approximately 68% in Q2, representing an 11-percentage-point sequential improvement.

Free cash flow margin achieved nearly 30% in Q1 — establishing a company record. During the identical period, Micron reduced debt obligations by roughly $2.7 billion while executing approximately $300 million in share buybacks.

Long-Term Capacity Build

Micron has outlined plans to deploy approximately $200 billion toward manufacturing capacity in the United States and allied nations over the long term, including a proposed $100 billion mega-fab facility in New York State. Additional investments include a $24 billion silicon-wafer fabrication plant in Singapore and the acquisition of DRAM production facilities in Taiwan from Powerchip Semiconductor for approximately $1.8 billion.

These capital expenditures receive partial offset through up to $6.1 billion in CHIPS Act subsidies and a 25% advanced manufacturing investment tax credit.

From a valuation perspective, if Micron were to trade at a forward P/E of 20 — remaining comfortably below the Nasdaq-100 average of 24.5 — the mathematics imply a share price near $660. Applying peer-group EV/Sales and EV/EBITDA median multiples, blended valuation methodologies point toward the low-$700 range.

The current Wall Street consensus price target clusters around $390, a level MU has already exceeded.