Micron's (NASDAQ:MU) share price is wallowing at long-term lows and is deeply undervalued. It is undervalued because of its industry placement, growth outlook, and stock price, a measly 14x earnings. The growth outlook is robust, and the P/E will fall to only 8x next year, suggesting a minimum of 75% upside is possible. This is a look at why.
1) Micron’s AI Business Is Booming
Micron returned to top-line growth early in 2024 as its AI business accelerated and legacy segments normalized. The growth accelerated sequentially for the next three quarters, with Q1 2025 growth slowing to only 85% but still solid and up significantly compared to the prior year. The primary driver is the data center segment, which grew 400% year-over-year on a sequential doubling in HBM shipments. HBM, specifically HBM3E, is the critical factor. It is the memory of choice for AI and accelerated computing, and Micron is the performance leader, providing better capacity with lower power consumption.
The HBM3E market is growing rapidly. The HBM memory industry grew by roughly 200% in 2024 and is expected to double in 2025. Eighty percent of the market is HBM3E. Micron’s CEO has forecasted that the HBM market will grow 4x from its 2024 levels by 2028, suggesting that three years of solid growth lie ahead for this business. After that, Micron’s business will remain solid and likely continue to grow, with the AI shift benefiting the mobile, PC, and automotive semiconductor markets.
Expanding capacity will aid the boom. Micron received over $6 billion in funding from the CHIPs Act to facilitate expansion projects domestically, and international projects are underway. The India-based manufacturing facility is expected to commence operations in Phase I this year, and plans for Phase II are moving forward.
2) Is Micron the Most Downgraded Stock? Seriously?
Micron is ranked on MarketBeat’s list of Most Downgraded Stocks, but take that news with a grain of salt. The ranking is due to numerous price target reductions since the FQ1 2025/CQ4 2024 results were released, but nothing is bearish in the data.
The 26 analysts' MarketBeat tracks with current ratings show a high conviction in their Moderate Buy rating and forecast a 45% upside for the stock price. The strength of conviction is seen in the number of analysts rating at Buy or higher, about 88%, and the price targets. The latest round of activity included numerous price target reductions but to levels that align with the consensus; consensus is near $135 and 45% above mid-February trading.
The cash flow and balance are reasons why analysts like this stock. The company’s balance sheet is a fortress with a total liability of about 0.5x equity and equity on the rise. The balance sheet and cash flow allow for opportunistic acquisition and investment while paying dividends and buying back shares.
3) The Technical Outlook: Micron Is Well-Supported Near $90
Micron’s stock price is having difficulty gaining traction but is unlikely to fall further than it has in the last twelve months. The market is deeply undervalued at these levels and shows solid support at the $90 level. Support is due primarily to the institutions, which own about 80% of the stock and have been buying in the range's low end. With this in play, it will only take a positive news cycle to get the market in gear, which could come with the Q2 results.
The analysts forecast a solid quarter with 36% top-line growth and broader margins but have set the bar low. 95% of revisions tracked by MarketBeat include lowered price targets, setting the company up to outperform. With NVIDIA's (NASDAQ:NVDA) Blackwell ramped to full production and production capacity expanding, Micron could outperform by a wide margin. 