Is It Too Late To Consider Micron Technology (MU) After Its Recent 1-Year Surge?

• If you are wondering whether Micron Technology's share price matches its underlying value or if expectations have moved ahead of fundamentals, this article is for you.
• Micron closed at US$339.55, with returns of 19.0% over 7 days, 34.5% over 30 days, 7.7% year to date, 242.7% over 1 year and a very large 3-year gain.
• Recent attention on Micron has centered on its role in data center and AI related memory, along with broader interest in semiconductor names tied to high performance computing. These themes have shaped how investors interpret the share price moves and the risks that come with them.
• Our valuation checks give Micron a score of 3/6. Next we will walk through the key valuation methods behind that figure and then finish by looking at a more complete way to think about what the market might be pricing in.

Micron Technology delivered 242.7% returns over the last year. See how this stacks up to the rest of the Semiconductor industry.

Approach 1: Micron Technology Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a company might be worth by projecting its future cash flows and discounting them back to today using a required return. It is essentially asking what all those future dollars are worth in present terms.

For Micron Technology, the model uses a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is about $5.8b. Analysts provide explicit free cash flow projections for the coming years, such as $20.4b in 2026 and $26.0b in 2027. Later years out to 2035 are extrapolated by Simply Wall St rather than based on direct analyst estimates.

When all these projected cash flows are discounted back, the DCF model arrives at an estimated intrinsic value of about $191.84 per share. Compared with the recent share price of US$339.55, this implies the stock is around 77.0% above the DCF estimate. On this specific cash flow framework, this points to a rich valuation.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Micron Technology may be overvalued by 77.0%. Discover 884 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Micron Technology.

Approach 2: Micron Technology Price vs Earnings

For a profitable company like Micron, the P/E ratio is a useful way to think about what you are paying for each dollar of earnings. A higher or lower P/E often reflects what the market expects for future earnings, as well as how much risk investors are willing to accept.

Growth expectations and risk matter because they influence what a normal or fair P/E should look like. Faster expected earnings growth or lower perceived risk can justify a higher multiple, while slower growth or higher risk usually calls for a lower one.

Micron currently trades on a P/E of 32.09x. That sits below the peer average of 61.96x, but above the broader Semiconductor industry average of 42.34x. Simply Wall St also calculates a Fair Ratio of 51.58x. This is the P/E you might expect given Micron’s earnings growth profile, industry, profit margin, market cap and risk factors.

This Fair Ratio is more tailored than a simple comparison with peers or the industry because it folds in company specific drivers rather than just taking broad group averages. Comparing Micron’s 32.09x P/E to the 51.58x Fair Ratio suggests the shares are trading below that Fair Ratio based assessment.

Result: UNDERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1443 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Micron Technology Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce Narratives, an approach on Simply Wall St’s Community page where you connect your story about Micron Technology to your own revenue, earnings and margin assumptions. These then flow into a forecast, a fair value and a simple Fair Value versus Price view that helps you decide when to act. Everything updates automatically as fresh news or earnings arrive. For example, one investor might build a Micron Narrative with a fair value of about US$203.92 per share based on revenue growth of 14%, a 20% net margin and a future P/E of 30x. Another might build a higher growth Narrative with a fair value near US$249.31 using revenue growth of 24.21%, a 33.37% profit margin and a future P/E of 16.21x. This gives you a clear sense of how different stories and assumptions about the same company can lead to very different conclusions.

Do you think there's more to the story for Micron Technology? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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