A Fresh Look at Micron Technology (MU) Valuation After High-Bandwidth Memory Demand Sparks Guidance Upgrade

Micron Technology (MU) just hit a new 52-week high after announcing a sharp ramp-up in high-bandwidth memory (HBM3E) production to meet powerful demand from major AI players like Nvidia and AMD. The recent upgrade to its fourth quarter guidance, driven by rising DRAM prices, resilient execution, and momentum in AI memory, has investors looking closely at whether this is the beginning of a new phase for Micron or simply a reaction to a red-hot sector. A streak of earnings beats and a wave of upward earnings estimate revisions are further fueling optimism around the stock’s near-term prospects.

All of this comes as Micron’s share price has surged more than 56% over the past year, with record-breaking performance in recent months. Supply agreements with industry giants and positive institutional sentiment have pushed momentum higher. Policy tailwinds like U.S. chip subsidies and new trade restrictions have also added to the company’s competitive strengths. Revenue and net income have both grown double digits year-over-year, reinforcing a stronger foundation heading into the next earnings cycle.

This raises a practical question for investors: is Micron’s recent rally signaling an opportunity to buy in, or is the market already pricing in the company’s future growth story?

Most Popular Narrative: 10% Undervalued

According to the most widely followed narrative, Micron Technology is undervalued by around 10 percent, with analysts projecting a fair value above its current market price.

Explosive growth in AI and data center applications is driving robust, sustained demand for advanced DRAM and high-bandwidth memory (HBM). This has resulted in improved pricing power, strengthening bit growth forecasts, and long-term revenue tailwinds for Micron.

Want to understand what is fueling this big upside call? Analysts are anchoring their price target on ambitious growth in high-value memory, expanding margins, and bold future profit projections. The financial leaps they are expecting might surprise you. Curious to see the numbers and the method behind this bullish valuation?

Result: Fair Value of $150.57 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, intensifying competition among global memory giants and unpredictable shifts in DRAM and NAND markets could quickly change Micron’s growth trajectory.

Find out about the key risks to this Micron Technology narrative.

Another View: Discounted Cash Flow Model

Taking a look at our DCF model, the story shifts. This approach suggests Micron’s current share price is actually above its estimated fair value. This raises doubts about how much future growth is already factored in. Which perspective better reflects reality?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Micron Technology for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Micron Technology Narrative

If you see things differently or want to dig into Micron’s numbers yourself, you can quickly craft your own view in just a few minutes. Do it your way

A great starting point for your Micron Technology research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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