Micron Technology's stock has climbed 226% this year - but its future driver of momentum could be something different than what's so far carried it into the artificial-intelligence winners circle.
Spectacular earnings growth has been the main force behind Micron's (MU) soaring stock price, rather than a change in how investors value each dollar that the company earns.
In fact, the stock has been notoriously cheap, trading at a 5.77 multiple of its price relative to estimated earnings for the next calendar year. That's the fifth lowest valuation multiple of any S&P 500 SPX component, according to Dow Jones Market Data.
But there's reason to believe that Micron shares could soon fetch a higher multiple, wrote TD Cowen analyst Krish Sankar. That sort of "rerating" could send the stock higher, he noted, at a time when investors might be worrying that there's not much more room for the company to expand its margins, a measure of profitability.
His price target of $1,600 is based on a price-to-earnings multiple of 9x 2027 estimates, notably above the current ratio of 5.77x. The target is about 70% ahead of current levels near $934.
Sankar notes that Micron is roughly 80% through its typical 18-month margin-expansion cycle, suggesting that earnings estimates in the near future might not increase as dramatically as they have been recently. With memory-chip prices so high, Micron saw its earnings per share rise 1,215% in its last-reported quarter, which illustrates the extent of profit improvement that investors have come to know.
He acknowledges a scenario where earnings fall from peak levels but "the stock keeps grinding higher." That's because he sees investors continuing to gain confidence that the memory cycle is "more durable than the margin path implies."
Demand for dynamic-random-access memory - used to store content for AI - has been booming, and won't be capped by demand for consumer electronics, which Sankar noted was the case in past cycles. Compared to prior downturns in 2019 and 2022, when "supply moved ahead of demand," this time is different, and that sustained demand could support the stock, he said.
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Abstract
Micron Technology will report quarterly results on September 30, 2026, Post-Mkt; this preview outlines consensus revenue, margin and EPS expectations, last-quarter performance highlights, and the outlook for key business segments and stock-price drivers.
Market Forecast
Based on the company’s guided framework and market tracking, this quarter’s revenue estimate is 50.62 billion US dollars with a year-over-year increase of 3.51%, forecast EBIT is 41.92 billion US dollars with a year-over-year increase of 1,040.56%, and forecast EPS is 31.30 with a year-over-year increase of 994.40%; while consolidated gross margin and adjusted EPS guidance ranges are not explicitly repeated in market data, the company’s prior disclosure cadence implies a sequentially improving profit mix. Market models imply an upward revenue mix led by data center and cloud memory demand, with mobile and client steady, and auto and embedded continuing to expand from a smaller base; the most promising segment is cloud memory at 13.77 billion US dollars with robust year-over-year expansion implied by the high-teens to low-twenties growth backdrop.
Last Quarter Review
Micron Technology’s previous quarter delivered revenue of 41.46 billion US dollars, a gross profit margin of 84.56%, GAAP net profit attributable to the parent company of 28.24 billion US dollars with a quarter-on-quarter change of 104.88, a net profit margin of 68.13%, and adjusted EPS of 25.11 with a year-over-year increase of 12.15. The quarter also exceeded prior consensus with an EBIT of 33.68 billion US dollars and a revenue surprise, reflecting improved average selling prices and disciplined cost control. Main business highlights included cloud memory revenue of 13.77 billion US dollars and core data center revenue of 11.52 billion US dollars, with mobile and client at 11.52 billion US dollars and auto and embedded at 4.63 billion US dollars; the mix pointed to outsized contribution from cloud and data-center demand.
Current Quarter Outlook (with major analytical insights)
Main business: Data center and cloud memory
Cloud and data center memory shipments remain the headline driver for topline and margin progression this quarter. The forecast revenue mix indicates continued strength in high-bandwidth and high-capacity DRAM configured for accelerated compute buildouts, which is consistent with the rising share of cloud deployments in overall shipments. Price discipline in premium configurations supports blended gross margin resilience, while node migration and yield improvements are expected to aid unit cost reductions. Given the scale of AI-related infrastructure deployments, backlog coverage combined with shipment velocity should sustain sequential revenue growth, even if unit pricing normalizes in some legacy configurations.