Micron earnings test $1.2T valuation as HBM demand drives 240% rally

Micron Technology reports fiscal third-quarter earnings June 24, with the stock up 240 percent year to date as HBM demand reshapes the memory chip maker's growth trajectory.

"The memory trade is alive and well," C.J. Muse, analyst at Cantor Fitzgerald, said, citing DRAM and NAND supply constraints that could persist longer than usual.

In the fiscal second quarter ended February, Micron posted revenue of $23.8 billion, up 196 percent from a year earlier, and non-GAAP earnings of $12.20 per diluted share, a 682 percent surge. Wall Street expects adjusted earnings to grow 172 percent annually to $98.52 per share in fiscal 2027, according to consensus estimates. The company's current fiscal year earnings are expected to grow 621.6 percent, per StockAnalysis.com data.

The stock's 240 percent advance has pushed its market capitalization past $1.2 trillion, pricing the company at 45 times adjusted earnings. TD Cowen's Krish Sankar raised his price target to $1,500, while Goldman Sachs set a $900 target with a Neutral rating, citing elevated expectations. A miss on guidance when Micron reports June 24 could trigger a sharp revaluation.

Micron's high-bandwidth memory chips have become a strategic component in AI infrastructure, with all three major producers — SK Hynix, Samsung and Micron — committing their HBM capacity through 2026. The company signed its first five-year customer contract, a departure from the industry's historical norm of quarterly or annual agreements. RBC Capital's Srini Pajjuri sees the DRAM upcycle potentially lasting another five to six quarters, supported by strong capital spending and HBM demand.

The memory chip industry has historically been cyclical. Morningstar analyst William Kerwin said Micron lacks a competitive moat, noting the company lost market share in NAND and DRAM even during the recent boom. Memory chip revenue dropped 40 percent in 2023 after the pandemic-driven boom gave way to oversupply. New fabrication plants from competitors are expected online by 2028, which could saturate the market and trigger a downturn.

At 45 times adjusted earnings, Micron's valuation already prices in several years of strong growth. The stock traded around 15 times earnings near the last cycle's peak. The Efficient Investor, cited by TipRanks, argues Wall Street is "still underestimating the magnitude of Micron's earnings growth" and values the stock at $1,700.

Micron and Nvidia are material contributors to the Technology sector's growth profile in 2026, according to Zacks Director of Research Sheraz Mian. Excluding these two semiconductor players, second-quarter earnings growth for the rest of the Zacks Technology sector drops to 25 percent from 44.8 percent, he said.

The guidance raise on June 24 will signal whether HBM demand is still accelerating or approaching a plateau. Investors will watch for updated margin forecasts and any changes to the company's long-term supply agreements. Nvidia's earnings trajectory is closely tied to the same AI infrastructure buildout, making the two stocks complementary bets on the cycle.

This article is for informational purposes only and does not constitute investment advice.