Micron Technology stock remains in a bull market, making it one of the top-performing companies in the United States. MU has jumped by 155% this year, making it the fifth-best-performing company in the S&P 500 Index after Sandisk (SNDK), Intel (INTC), Seagate Technology (STX), and Western Digital (WDC).
Micron stock is still cheap despite the strong surge
There are signs that Micron has become a cheap company despite its market capitalization jumping to $846 billion. This is a sign that the company will soon enter the $1 trillion club as the AI boom advances.
Ideally, a company like Micron that has a large market share in the DRAM and NAND industries should receive a higher valuation than the broader US stock market. That’s mostly because of its strong revenue growth and profitability metrics.
However, data compiled by Seeking Alpha shows that the company spots a forward price-to-earnings ratio of 12.8, which is much lower than the technology sector’s average of 25. It is also much lower than the five-year average of 74.
Other valuation metrics also show that the company is cheap. For example, the forward price-to-earnings-to-growth ratio of 0.09, is much lower than most companies in the United States. The PEG ratio is favored more because it includes the concept of growth in its calculation.
The other key valuation metric that demonstrates that the Micron share price is cheap is known as the rule-of-40, which is common in the SaaS industry. This valuation figure looks at a company’s revenue growth and its profit margins.
In Micron’s case, its net income margin is 41%, while its forward revenue growth is 85%. This gives it a rule-of-40 multiple of 126%. In this approach, a company is said to be undervalued if the multiple falls below 40, and vice versa. That’s because it shows that it is prioritizing its growth compared to profitability.
Micron has more growth potential
The main bullish aspect for the MU stock price is that its business is firing on all cylinders amid the AI boom. This boom has led to a surge in demand for its DRAM and NAND products, which has pushed their prices higher. Analysts believe that the prices will continue rising in the foreseeable future, maintaining its revenue growth and margins.
The most recent results showed that the company made over $23.8 billion in the second quarter of its fiscal year 2026, up sharply from $8 billion in the same period last year. Its gross margin jumped to 74.4%, helped by the higher prices and volume. As a result, its net income soared to over $13.78 billion.
Analysts are optimistic that its growth trajectory will continue in the coming years. The estimate is that its annual revenue will jump by 193% this year to $109 billion, followed by $172 billion next year. If this trend continues, chances are that it will start making over $500 billion in the near term.
MU stock price technical analysis
Micron stock chart | Source: TradingView
The daily chart reveals that the Micron stock price has been in a strong bull run this year. It was trading at $750 today, a few points below the year-to-date high of $818.
The stock has jumped above all moving averages. It has also continued forming a series of higher highs.
Therefore, a move above the key resistance level at $818 will point to more gains in the near term. If this happens, it may move to the key resistance at $900, a move that will push it above the $1 trillion market cap.
On the flip side, a drop below the support at $650 will invalidate the bullish outlook and point to more gains.
The post Micron stock targets $1 trillion valuation as metrics show shares remain cheap appeared first on Invezz
