Micron Technology stock has climbed 500% over the past 12 months as AI-driven demand for memory chips pushed revenue and earnings to records. The company's fiscal 2026 results show explosive growth across every business line, yet one analyst warns the historically cyclical chip market could turn against it.
Micron Technology's stock has surged 500% over the last 12 months, as of the market close on Oct. 1, as artificial intelligence workloads across data centers, smartphones, computers and cars drove soaring demand for memory. The rally raises the question of whether the gain has already priced in the company's future growth.
Record revenue caps a blockbuster fiscal 2026
The company closed its fiscal 2026 year on Sept. 3, reporting $133.1 billion in total revenue, a 256% increase from the previous year. That pace accelerated sharply from fiscal 2025, when revenue grew 49%. Core data center revenue, which includes storage and non-HBM memory sold to data center operators, rose 420% to $37.6 billion, the fastest growth of the company's four segments.
Cloud memory sales, which cover hyperscale customer memory and high-bandwidth memory shipped to data center customers broadly, climbed 219% to $43.1 billion. Mobile and client revenue grew 209% to $36.6 billion, while automotive and embedded sales rose 234% to $15.9 billion, tied partly to memory-hungry autonomous vehicles and robots. In prepared remarks to shareholders released Sept. 30, Chief Executive Sanjay Mehrotra said memory supply could be even tighter in fiscal 2027 and 2028 than in fiscal 2026.
Cheap on paper, but the cycle is the catch
Tight supply let Micron push through higher prices, and earnings exploded 879% to $74.33 per share in fiscal 2026. That leaves the stock at a P/E ratio of just 14.7, below the S&P 500's 23.5 and the Nasdaq-100's 35.2. Wall Street's average estimate puts fiscal 2027 earnings at $176.69 per share, a forward P/E of 6.2.
However, the semiconductor industry has always been cyclical, so the current pricing bonanza probably won't last forever. Micron and its rivals are racing to add manufacturing capacity, which would eventually ease supply constraints and pressure prices back down.
Cheaper AI models could cool chip demand
Last Tuesday, OpenAI launched a $500-per-month subscription plan while halving the token allowance on its $200-per-month tier, effectively raising the price of its top offering 150% overnight — a move almost certainly driven by rising infrastructure costs. Separately, a survey by UBS Group found 60% of businesses were already routing some AI tasks to cheaper, more efficient models that need less computing power.
Motley Fool analyst Anthony Di Pizio said he won't personally be buying Micron shares at the current price, citing the difficulty of gauging fair value given a potential shift in supply and demand dynamics over the next couple of years.
Source: The Motley Fool
Trading involves risk.
Risk Disclaimer
