Micron stock has surged almost 690% over the past 12 months but has dropped nearly 30% since peaking in June, even as fiscal 2026 revenue jumped 203% to $79 billion. The gap points to lingering investor caution about the memory chip maker's history of boom-and-bust cycles.
Micron stock has surged almost 690% over the past 12 months, then fallen nearly 30% since peaking in June. The pullback was likely a breather after a rally that accelerated in April, and the stock's relatively low valuation may leave some investors puzzled about why it hasn't climbed further.
Revenue and margins surge in the current upcycle
In the first nine months of fiscal 2026, which ended May 28, Micron's revenue surged 203% to $79 billion compared with the same period a year earlier. Net income for the first three quarters of fiscal 2026 reached $47 billion, a 60% net margin, far above the $5 billion the company earned in the same period the prior year.
Analysts forecast 247% revenue growth for the current fiscal year, and while the 85% growth forecast for fiscal 2027 marks a slowdown, it still suggests the upcycle is unlikely to end soon. Despite that growth, the stock's trailing price-to-earnings ratio stands at 20, and its forward P/E of 12 shows investors remain reluctant to bid the price higher.
Cyclicality keeps investors cautious
Current demand for high-bandwidth memory (HBM) has benefited Micron, and the company has compelled customers to sign five-year price agreements, replacing the one-year contracts used previously. Still, supply has caught up with, and usually exceeded, demand in every previous upcycle, and Micron may face competition beyond its traditional rivals, Samsung and SK Hynix.
Chinese manufacturer ChangXin Memory Technologies may begin producing HBM by the end of the year, which could reduce Micron's pricing power. Given the revenue forecasts, Micron's growth is unlikely to end soon, but the potential entry of another competitor means investors must watch for a downturn that could validate the concerns of the company's bears. Further gains will likely depend on the chip stock showing that the upcycle is far from over.
Source: The Motley Fool
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