Micron Has Surged Nearly 700% Over the Past Year -- Here Is What the Valuation Says About Its Next Move
Micron's valuation could be a warning sign, but history may not repeat itself this time around.
Overview
Micron (NASDAQ: MU) has been one of the hottest stocks over the past year. The stock has tripled in 2026 and is up nearly 700% over the past year, as of this writing. Despite that huge move, the stock trades at a minuscule forward price-to-earnings (P/E) ratio of below 6 times fiscal 2027 (ending August 2027) analyst estimates.
The reason for Micron's low valuation is that the memory market has historically been highly cyclical. With cyclical stocks, history often teaches us to buy when P/Es are high and sell when P/Es are low. The reason for this is that when commoditized markets are booming, companies generally increase capacity, and the markets eventually crash. You can see plenty of examples in memory, natural gas, fertilizer, and shipping, just to name a few markets. Capacity then leaves the market, demand naturally grows, and the next boom cycle is around the corner.
Details
However, there is good reason to think that this memory cycle is much different from past ones. First, it is tied directly to one of the most important technological innovations of our time, artificial intelligence (AI), and the AI capex cycle still looks to be in its early innings. The massive data centers being built require a huge amount of memory, but the industry is failing to keep up with demand.
Source
Originally published at www.fool.com.