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Wall Street just sold off one of the most profitable companies in America.
This company expects to earn more than $150 per share over the next 12 months. Right now, you can buy the stock for just 4x its earnings.
The reason for the discount has nothing to do with the business.
Micron Technology (Nasdaq: MU) fell 17% on Thursday – before rallying on Friday. Chip stocks sold off hard after Democrats won control of the House and Senate, along with the governor’s race in Texas. Investors worry that a new Congress will slow the AI data center buildout.
The selling didn’t start with the election. Investors were already doubting that memory prices could stay this high for this long.
Here’s what that fear ignores.
Micron just reported fiscal 2026 revenue of $133.2 billion, up 256% from a year ago. EPS jumped 811% to $75.52. For the current quarter, management guided to record revenue of $61.5 billion and EPS of $38.15. It also expects revenue to grow every quarter of fiscal 2027.
Annualize just that first-quarter guide and you get $152 in EPS. With the stock around $710, that’s 4.7x earnings, before any growth. Use Wall Street’s full-year fiscal 2027 estimates and the multiple drops to about 4x. That’s one of the lowest forward valuations in Micron’s history.
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The worry is that memory booms always end. Two things make this one different.
First, the shortage isn’t easing.
Micron expects industry DRAM supply to grow only in the low-20% range in 2027 and 2028, with the market staying supply-constrained in both years. Management says it has no line of sight to when supply and demand return to balance. TrendForce expects DRAM contract prices to rise another 10% to 15% this quarter.
Second, the contracts.
Micron has signed 26 multi-year take-or-pay agreements covering more than 35% of its revenue through 2030. Contracted revenue under those deals totals about $150 billion, which is more than all of fiscal 2026 sales. Customers have committed $32 billion, mostly in cash deposits. Management says that even at floor prices, margins would be well above any prior cycle peak.
There’s one more catalyst on the calendar. On December 9, Micron can start buying back stock under a new $35.2 billion authorization. The company has $68.3 billion in net cash and plans to return 100% of excess cash to shareholders over time. A lower share count increases the earnings per share.
A data center slowdown would have to be severe to dent a company with $150 billion under contract and a supply chain that’s sold out. At 4x earnings, the market is pricing in that kind of collapse.
I think the market has it wrong. And I see real upside from here.
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Ian Wyatt
Editor, Daily Profit