Micron’s shares trade at a low multiple as earnings surge, but new memory capacity from SK Hynix won’t arrive until 2028.
Micron Technology (NASDAQ: MU) trades at roughly 6 times next year’s expected earnings, reflecting investor skepticism about sustained growth despite a sharp earnings rebound. The stock hovers near $878, down from a higher multiple on trailing earnings as analysts project rapid profit expansion in the near term.
The company’s fiscal third-quarter revenue quadrupled year-over-year to $41.5 billion, with gross margins jumping to 84.6% from 37.7% a year earlier. Operating cash flow surged to $25.4 billion, more than five times the prior-year figure. Guidance for the fiscal fourth quarter points to $50 billion in revenue, 86% gross margins, and $30.73 in earnings per share, suggesting annualized earnings could support a 7x multiple.
The memory cycle’s typical boom-bust pattern hinges on new supply, but SK Hynix’s $38 billion investment in two new fabs won’t begin production until December 2028. This delay extends the current upswing, driven by data center demand and tight supply, though valuations remain subdued on expectations of an eventual downturn.