Micron (MU): Has the AI-Driven Rally Left the Stock Overvalued or Still Underappreciated on Earnings Power?

Micron Technology (MU) has quietly become one of the biggest beneficiaries of the AI spending wave, with the stock more than doubling over the past year as investors reassess its earnings power.

See our latest analysis for Micron Technology.

The latest leg higher, including a 4.47% 1 day share price return and a strong 169.56% 1 year total shareholder return, suggests momentum is still building as investors price in Micron's role at the heart of AI infrastructure spending.

If Micron's run has you thinking about where else growth and innovation might show up next, it is worth scanning high growth tech and AI stocks for other potential opportunities riding similar trends.

With Micron now trading above many analyst targets after a stunning run, the key question is whether investors are overpaying for peak AI optimism or if the market is still underestimating its long term earnings power.

Most Popular Narrative Narrative: 29.3% Overvalued

According to BlackGoat's widely followed narrative, Micron's fair value of around $200 sits meaningfully below the recent $263.71 close, framing a punchy valuation debate.

The AI Supercycle: This is the most powerful catalyst. The demand for next-generation HBM is unprecedented. Micron has successfully passed NVIDIA's quality verification for its HBM3E products, becoming a key supplier for the next-generation "Blackwell" AI accelerator. The company is now shipping high-volume HBM to four major customers across both GPU and ASIC platforms. With its entire 2025 production capacity already sold out, analysts project the HBM market will grow from roughly $30 billion in 2025 to a staggering $100 billion by 2030, representing a massive runway for growth.

Read the complete narrative.

Want to see how this narrative turns explosive AI demand into a premium price tag? The answer lies in aggressive growth, rising margins, and a bold future earnings multiple. Curious which precise financial levers justify paying up today? Read on to uncover the full valuation playbook.

Result: Fair Value of $203.92 (OVERVALUED)

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

However, this bullish setup could unravel if memory oversupply returns or if geopolitical tensions with China escalate and crimp Micron's key growth markets.

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

Another View: Market Multiples Paint a Softer Picture

While BlackGoat sees Micron as 29.3% overvalued, a simple earnings based lens looks less stretched. At 34.7 times earnings, Micron trades below both the US Semiconductor average of 38.1 times and peers at 91 times. Even under a 49.8 times fair ratio the market could drift toward, valuation still appears relatively restrained.

That gap suggests investors may not be fully pricing in Micron's earnings power yet, but it also leaves room for disappointment if AI expectations cool. The result is a more nuanced picture of how much weight to put on headline valuation models versus market-based multiples.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Micron Technology Narrative

If you see the numbers differently or want to put your own spin on Micron's story, you can build a full narrative in under three 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.

Looking for more high conviction opportunities?

Before you move on, put your research momentum to work by scanning fresh stock ideas that match different strategies, so you are not leaving potential opportunity on the table.

• Capture rapid innovation in smaller names by targeting selective growth potential with these 3602 penny stocks with strong financials that already show stronger underlying fundamentals than the typical speculative trade.
• Position yourself for the next leg of intelligent automation by reviewing these 26 AI penny stocks that are building real revenue streams from machine learning and data driven platforms.
• Sharpen your value edge by focusing on these 908 undervalued stocks based on cash flows where prices lag behind cash flow potential, giving you a chance to act before the crowd catches on.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com