Micron Earnings: Beware Attempting to Time the Peak

Key Morningstar Metrics for Micron Technology Inc

• Fair Value Estimate
  : $700
• Morningstar Rating
  : ★★
• Morningstar Economic Moat Rating
  : None
• Morningstar Uncertainty Rating
  : Very High

What We Thought of Micron Technology Inc’s Earnings

Micron Technology MU posted another blowout quarter, with sales rising 380% year on year to $54 billion. Growth was led nearly entirely by pricing growth. Gross margin expanded more than 40 points year on year to 87%, with incremental pricing-led revenue coming as practically pure profit.

Why it matters: The highest pricing growth we’ve ever seen in the modern memory market continues. Still, quarter-on-quarter pricing growth is decelerating, and we believe a peak is coming in early 2028. To us, it looks like we’re in the final stretch of this unprecedented cyclical upswing.

• We’ve been bullish on pricing through 2027, with low supply coming online before 2028. It looks to be moderating more quickly than we expected, but is nonetheless extremely positive. We remain bullish on the next four quarters, but this deceleration indicates to us that a peak is on the horizon.
• We maintain that the current paradigm is a tremendous cycle, but a cycle nonetheless. We believe commodity pricing dynamics will hold, and as a massive amount of new supply comes online through 2030, there will be downward pressure on memory prices.

The bottom line: We lower our fair value estimate for no-moat Micron to $700, from $850, behind moderated short-term upcycle growth forecasts and a continued expectation for a steep downturn starting in 2029. Shares were flat after hours, and remain overvalued to us.

• The market appears to be pricing in a partial downturn, but not enough of one. We see memory supply doubling by 2028, driving a steep pricing decline across 2029 and 2031. After huge capital spending, we expect heady depreciation to commensurately drive margins back down to earth.
• The flat market reaction shows us that much of the current upswing has already been priced in. To us, the “easy money” has been made—1,100% appreciation since the start of 2025. We see significant risk for long-term investors, especially once the market starts to bake in a pricing peak.