MICRON TECHNOLOGY INC (MU): what the price requires
At today's price, MICRON TECHNOLOGY INC (MU) is priced for +28.0% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/MU
Headline
| Field | Value |
|---|---|
| Ticker | MU |
| Company | MICRON TECHNOLOGY INC |
| Current price | $936.50/sh |
| Composition | Cloud Memory Business Unit (CMBU) 36% / Core Data Center Business Unit (CDBU) 19% / Mobile and Client Business Unit (MCBU) 32% / Automotive and Embedded Business Unit (AEBU) 13% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 23.4% |
| Operating margin today | 65.4% |
| Margin compression implied | -42.0pp |
| Implied growth | 28.0% |
| Multiple paid | 18x operating income |
The operating-margin requirement is derived from the framework's value band at year 11, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 12.6% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~4.7pp.
Reconcile: at the x-ray's 9.3% required return this reads ~11.5%/yr; the models below use their own rates.
How unusual the bet is: elevated
| Reference | Value |
|---|---|
| vs own history | -0.40σ |
| sustained it ~5 years at this level | 30% |
| implied end-window share | 1% |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.97x | 5 | expensive |
| Earnings | 3.50x | 5 | expensive |
| Relative | 0.96x | 5 | justifies |
| Growth | 0.77x | 3 | justifies |
Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.2%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $1432.46 | 0.65x | yes | FCF base $47.9B, growth 25% (input: historical growth), terminal g 4.0%, WACC 9.2%, 7yr projection |
| DCF Exit Multiple | Growth | $1101.76 | 0.85x | yes | Exit EV/EBITDA: 12.4x / 15.4x / 18.4x (bear / base = today's held flat / bull), 7yr |
| Relative Valuation | Relative | $1069.05 | 0.88x | yes | P/E 22x (static sector reference · 2026-04), scenarios: 17.6x / 22.0x / 26.4x (bear / base = reference held flat / bull), EV/EBITDA 16x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $476.52 | 1.97x | yes | BV/sh $87.97, ROE (TTM) 50.1%, ke 9.3% |
| Two-Stage Excess Return | Asset | $1353.72 | 0.69x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $1217.15 | 0.77x | yes | Rev $90.3B, growth 30% (input: historical growth; tapered), Terminal P/S: 9.5x / 11.9x / 14.3x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $530.04 | 1.77x | yes | EPS $44.17, growth 2% (input: historical EPS growth), PEG=10.63 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $117.44 | 7.97x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $14.79B × (1−21%) / WACC 9.2% → EPV (no growth) |
| Residual Income | Asset | $771.34 | 1.21x | yes | BV $87.97 + 5yr PV of (ROE (TTM) 50.1% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $295.68 | 3.17x | yes | √(22.5 × EPS $44.17 × BVPS $87.97) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $974.52 | 0.96x | yes | EBITDA $68.25B × sector EV/EBITDA 16.0x |
| FCF Yield | Earnings | $267.86 | 3.50x | yes | FCF $26172.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $256.46 | 3.65x | yes | SBC-adj FCF $24.96B (FCF $26.17B − SBC $1.21B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $1425.22 | 0.66x | yes | EPS $44.17 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $325.45 | 2.88x | yes | BV $87.97 × (ROIC 34.2% / WACC 9.2%) |
| P/Sales Sector | Relative | $394.21 | 2.38x | yes | Revenue $90.27B × sector P/S 5.0x |
| PEG Fair Value | Relative | $1656.38 | 0.57x | yes | EPS $44.17 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $477.51 | 1.96x | yes | EPS $44.17 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net cash | $13.9b |
| Net debt / NOPAT (after-tax) | -0.31x (net cash) |
| Net debt / operating income (pre-tax) | -0.24x (net cash) |
| Interest coverage | 252.2x |
| Share count CAGR (dilution) | 0.5% |
| Burning cash | no |
Bullet Takeaways
- Micron has, for now, stopped behaving like a commodity memory maker: HBM high-bandwidth memory is sold out through 2026 under fixed-price contracts, data center is more than half of sales, and Q3 FY2026 revenue hit a record $41.46 billion, up 346% year over year.
- The defining risk is the cycle, not the demand: today's roughly 48% operating margin is a peak, and the price embeds about 36% annual operating-income growth, a bet that only holds if memory pricing does not mean-revert the way it always has.
- What moves the stock next is HBM4 and DRAM pricing: management guides Q4 FY2026 revenue to about $50 billion with gross margin near 86%, so the next prints test how long the shortage-driven margins last.
Bull Case
Begin with the fear, because every memory bull has to answer it. Memory is the most cyclical business in semiconductors: DRAM and NAND are commodities, the industry has destroyed capital through boom-and-bust cycles for decades, and the standard warning is that today's record margins are simply the top of another cycle that will turn. That history is real, and a buyer at today's price has to confront it. The bull case is not that the cycle is repealed; it is that the data from the most recent quarter shows something the past cycles did not have, a structural demand source that has changed the supply-demand math.
The evidence is in the numbers Micron just printed. Q3 FY2026 revenue reached a record $41.46 billion, up 346% year over year and 74% sequentially, with data center now more than half of total sales. The trailing operating margin sits around 48%, a level memory has rarely sustained. What is different this time is HBM, the high-bandwidth memory that sits beside AI accelerators: Micron's HBM is sold out through 2026 under fixed-price, fixed-volume contracts, which converts the most volatile commodity in the industry into something closer to a booked backlog. Fixed-price contracts on sold-out capacity remove, for that portion of the business, the very price volatility that has historically wrecked memory margins. The bull case is that AI demand has created a durable shortage rather than a transient spike.
The balance sheet lets Micron press the advantage. The company carries net cash of roughly $14 billion, runs interest coverage near 80 times, and is generating enormous cash flow at these margins. That funds the capital expenditure required to expand HBM capacity, which is the binding constraint on growth, without forcing dilution or leverage. Management guides Q4 FY2026 revenue to about $50 billion with gross margin near 86%, and points to an HBM market growing from roughly $35 billion in 2025 toward $100 billion by 2028. If memory has genuinely become a mission-critical AI input with multi-year visibility, the price that looks extreme against trailing commodity economics looks different against a structurally scarce, contracted product. That is the bet the bull is underwriting.
Bear Case
The bear case lives in a single dependency: the price assumes the AI-memory shortage is durable, and HBM4 economics hold, when the entire history of this industry says memory pricing reverts. Strip away the AI narrative and Micron is a maker of DRAM and NAND, commodities whose price is set by the balance of supply and demand and that have collapsed in every prior cycle once capacity caught up. The most fragile assumption baked into today's price is that the roughly 86% gross margin and 48% operating margin the company now earns are something like a new baseline rather than the peak of the most severe shortage in fifteen years. Sold-out capacity and fixed-price contracts protect 2026, but the contracts that lock in today's prices also lock in the cure: every competitor and Micron itself is racing to add HBM capacity, and added capacity is exactly what ends memory shortages.
That dependency has a precise arithmetic. At about $1,140 (as of June 27, 2026) the price embeds roughly 36% annual operating-income growth sustained for years, on top of a margin that is already at a cyclical peak. No family of valuation method reaches the price: the asset-value lens, the earnings-power lens, and the peer-multiple lens all sit far below it, because they refuse to capitalize peak earnings as if they were permanent. The earnings-power lens is the most stretched of all, which is the tell, it normalizes Micron's earnings over a full cycle and finds today's price a long way above what through-cycle profits support. The price only works if the peak does not behave like a peak. If DRAM pricing rolls over when HBM capacity additions arrive in 2027 and beyond, the operating margin compresses from the high 40s toward the through-cycle norm, and a 36%-growth assumption layered on a peak margin unwinds in both directions at once, lower growth and a lower base.
The structural risks behind that dependency are the ones memory investors know to watch. Micron competes with Samsung and SK Hynix, both larger and both expanding HBM, so the contracted scarcity of 2026 is a race the competitors are running too. HBM is a share game against deep-pocketed rivals, and a single misstep on the HBM4 transition, a yield problem or a delayed node, would hand share to a competitor at the worst possible moment. Capital intensity is brutal; the capacity that drives growth also drives the next glut. None of this is a solvency concern, the balance sheet is pristine with net cash and 80-times coverage. The bear does not need Micron to be fragile financially. It needs only the observation that a deeply cyclical commodity producer is priced as if the best quarter in its history is the start of a permanent plateau.
Valuation
The valuation question for Micron is not whether the business is doing well; it plainly is. It is whether today's price treats a cyclical peak as a baseline. The current operating margin sits around 48% and the most recent quarter was a record $41.46 billion in revenue, but memory margins are the most cyclical in semiconductors, so a multiple that looks reasonable against peak earnings looks far more demanding against the earnings the business delivers across a full cycle.
The methods are unanimous that the price is rich, and the pattern is the point. No family of valuation method reaches the price: asset value, earnings power, and peer multiples all land well below it. The earnings-power lens is the most stretched, by a wide margin, precisely because it normalizes profit over a multi-year average rather than capitalizing the peak quarter, and on normalized earnings today's price is far above what the business has demonstrated through a cycle. Translated into a bet, the price embeds roughly 36% annual operating-income growth sustained for years on top of an already-peak margin. The price is reasonable only if the peak holds, and the value of the entire thesis rests on whether AI demand has structurally changed memory's cyclicality or merely delayed the next downturn.
The cohort and the solvency picture frame the risk. Micron sits in a semiconductor peer set, but its economics are memory-specific and far more cyclical than a logic or analog chipmaker, so a blended semiconductor multiple understates the swing in its earnings power. On solvency there is nothing to worry about: net cash of roughly $14 billion, interest coverage near 80 times, and cash generation that funds the capacity expansion internally. The downside here is not the balance sheet; it is the income statement. The street is largely on the bullish side, with consensus targets clustering near and above the current price, which credits the durable-shortage thesis the static methods structurally cannot. What an investor underwrites at this price is that the AI-memory cycle does not behave like every memory cycle before it.
Catalysts
The catalyst calendar for Micron is dominated by two linked variables: HBM and DRAM pricing. HBM is sold out through 2026 under fixed-price, fixed-volume contracts, and the company has completed price and volume agreements covering its entire calendar-2026 HBM supply, including HBM4. That gives unusual near-term revenue visibility for a memory maker. Management guides Q4 FY2026 revenue to about $50 billion with gross margin near 86%, so the immediate catalyst is simply whether the company delivers against a guidance bar that already prices in extraordinary strength.
The medium-term catalysts are the HBM4 ramp and the trajectory of DRAM and NAND prices. Sequential DRAM average selling prices and NAND prices have risen sharply on the shortage, and management frames an HBM market growing from roughly $35 billion in 2025 toward $100 billion by 2028. The yield and timing of the HBM4 transition is the swing factor, because it determines whether Micron holds or loses share against Samsung and SK Hynix during the most lucrative window the industry has seen.
The risk-side catalyst to watch is capacity. The same sold-out conditions that drive today's pricing are pulling capital into HBM and DRAM expansion across the industry, and the arrival of that capacity in 2027 and beyond is what historically ends memory shortages. The pace of competitor capacity announcements, and any early sign of DRAM pricing rolling over, is the leading indicator for when the peak the price depends on begins to fade.
Peer Cohorts (Per Segment, With Filing Citations)
Cloud Memory Business Unit (CMBU) / Core Data Center Business Unit (CDBU) (reported)
- SNDK (Sandisk Corporation)
- (no filing in the citation store)
- STX (Seagate Technology Holdings plc)
- (no filing in the citation store)
- WDC (WESTERN DIGITAL CORPORATION)
- (no filing in the citation store)
Mobile and Client Business Unit (MCBU) (reported)
- SNDK (Sandisk Corporation)
- (no filing in the citation store)
- WDC (WESTERN DIGITAL CORPORATION)
- (no filing in the citation store)
- STX (Seagate Technology Holdings plc)
- (no filing in the citation store)
Automotive and Embedded Business Unit (AEBU) (reported)
- SNDK (Sandisk Corporation)
- (no filing in the citation store)
- WDC (WESTERN DIGITAL CORPORATION)
- (no filing in the citation store)
- STX (Seagate Technology Holdings plc)
- (no filing in the citation store)
- UMC (United Microelectronics Corporation)
- (no filing in the citation store)
- INTC (INTEL CORP)
- (no filing in the citation store)
- TXN (TEXAS INSTRUMENTS INCORPORATED)
- (no filing in the citation store)
- STM (STMicroelectronics N.V.)
- (no filing in the citation store)
- NVDA (NVIDIA CORP)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Q3 FY2026 earnings release · company financial data; Q3 FY2026 earnings release · Q4 FY2026 guidance · company financial data · Q3 FY2026 earnings call · Q4 FY2026 guidance; company financial data; industry supply-demand analysis, 2026 · Q3 FY2026 earnings release; company financial data · analyst consensus, 2026