Micron Technology (NASDAQ:MU) has captured Wall Street’s attention with a record-breaking fiscal Q1 performance, driven by surging demand for artificial intelligence (AI) infrastructure. Following its earnings release, MU stock jumped 10%, reflecting investor excitement over the company’s claim that it is “more than sold out” on memory chips.
With a 200% gain in the past 12 months and over 1,655% returns in the last decade, Micron has proven itself a leader in the semiconductor space. The question now is whether MU stock remains a strong buy as AI reshapes the memory market.
Stellar Earnings Propel MU Stock
In fiscal Q1 ending November, Micron reported revenue of $13.64 billion and adjusted earnings per share (EPS) of $4.78, exceeding Wall Street estimates of $12.84 billion and $3.95 per share.
The company also forecast Q2 revenue of $18.70 billion, significantly above consensus expectations, with projected EPS of $8.42 per share—nearly doubling analyst estimates. These results reflect robust pricing power amid unprecedented AI-driven memory demand.
Micron raised its capital expenditure guidance to $20 billion for fiscal 2026, up from $18 billion, and projected gross margins of 68%, emphasizing its ability to maintain profitability despite capacity constraints. Analysts note that the total addressable market for specialized memory could reach $100 billion by 2028, with an annual growth rate of 40%.
Supply Constraints and AI Megatrend
Micron’s CEO highlighted that the company cannot keep up with orders for high-bandwidth memory, DRAM for data centers, or NAND flash storage. The company has paused sales to direct consumers, focusing entirely on AI infrastructure clients.
Production bottlenecks are physical, not managerial. Micron operates some of the most advanced semiconductor fabs in the world, and meaningful capacity expansion through greenfield construction won’t materially increase supply until fiscal 2027. Near-term growth relies on node transitions to 1-gamma DRAM and Generation 9 NAND, which are ramping faster than previous technologies.
Cloud memory sales doubled YoY to $5.28 billion, while data center SSD revenue exceeded $1 billion for the first time. Micron’s leadership in high-capacity QLC storage and Generation 6 SSDs positions it to meet growing AI server demand.
Pricing Power and Financial Strength
Gross margins reached 68% in Q1 and are expected to climb further. Micron has secured volume and pricing agreements for 2026 HBM production, providing rare revenue visibility in a cyclical industry.
Capital allocation emphasizes capacity expansion and technology leadership. Micron reduced balance-sheet debt by $2.7 billion and repurchased $300 million of MU stock in fiscal Q1, all while maintaining a 30% free cash flow margin.
Is MU Stock Undervalued?
Analysts project revenue growth from $37.38 billion in fiscal 2025 to $84.62 billion in fiscal 2027, with free cash flow expected to surge from $1.67 billion to $22.86 billion. Adjusted EPS is forecasted to rise from $8.29 per share to $37 per share over the same period.
MU stock currently trades at a forward P/E of 11.6x. At the same multiple, the stock could reach $407 by December 2026, representing a potential 63% upside. Among 37 analysts covering MU stock, 29 recommend Strong Buy, five Moderate Buy, and three Hold. The average price target is $252.44, slightly below the current price of $266, reflecting high expectations for continued growth.
Should Investors Buy MU Stock Now?
MU stock sits at a critical juncture, supported by record earnings, AI demand, and strong pricing power. Supply constraints could limit near-term sales, but they also protect margins and create pricing leverage. Long-term investors may view the stock as a buy-the-dip opportunity given its dominant position in memory for AI applications.
Investors should monitor capacity expansion progress, AI demand trends, and Micron’s gross margins to gauge whether MU stock can sustain its current momentum. With a strong balance sheet, aggressive capex, and market leadership, Micron remains a key player in the semiconductor and AI memory sectors.
Featured Image: Megapixl
Author Stephanie Bédard-Châteauneuf 
