Micron (MU) Investment Thesis
$MU$Micron Technology, Inc. delivered a record-breaking quarter with Q3 FY26 revenue of $41.5B, up 346% YoY, and non-GAAP gross margin surging to 84.9%.
MU's growth is powered by AI data center demand and transformative long-term take-or-pay contracts, securing ~50% of revenue and reducing cyclicality.
Management guides for $50B revenue next quarter and $30B in free cash flow for Q4 FY26, fully funding aggressive CapEx from operational cash generation.
I estimate MU's EPS at $114 in 12 months, supporting a $1,725/share price target by July 2027 at 15x P/E, with upside potential if growth outperforms.
Modify on 2026-09-26 21:30
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Investors are eagerly awaiting Micron Technology’s fiscal fourth-quarter earnings on September 30 to see whether the memory chip company continues to enjoy solid demand and pricing tailwinds.
Ahead of Q4 FY26 earnings, BMO Capital analyst reiterated a Buy rating on MU stock with a price target of $1,300. The analyst is bullish on Micron, as he believes that “memory remains in a supercycle as demand trends continue to exceed supply through CY27.”
Kumar ranks No. 9 among more than 12,500 analysts tracked on TipRanks. He has a 74% success rate, with an average return per rating of 46.9% over a one-year period.
Kumar raised his Q4 FY26 revenue estimate by $2 billion. He also increased his full-year FY27 revenue and EPS estimates to $268 billion and $168.62, respectively, from $249 billion and $151.91. Kumar doesn’t expect any new significant memory supply to arrive until the second half of 2027.
Meanwhile, Kumar expects HBM and DDR5 to drive Q4 FY26 results, with BMO’s checks indicating server DDR5 pricing offering the greater upside surprise. The analyst noted that both HBM3e and HBM4 likely saw a sequential rise in pricing, while client and consumer memory saw weaker demand.
For Q1 FY27, Kumar expects . He sees HBM3e and HBM4 prices rising modestly under annual pricing contracts. While server DDR5 pricing continues to offer the greater potential for upside surprises, Kumar expects demand to shift towards HBM4. Kumar highlighted that, as per his checks, HBM4 carries about a 20% to 25% price premium compared to HBM3e. As the product mix shifts toward HBM4, Kumar expects the average selling price (ASP) to move higher.
Meanwhile, Wall Street expects Micron to report , up from $3.03 in the prior-year quarter. Revenue is projected to surge about 351% to $51.07 billion.
Is Micron Stock a Good Buy?
With 20 Buys and one Hold, Wall Street has a Strong Buy consensus rating on Micron Technology stock. The average of $1,526.75 indicates 41.2% upside potential.
$SK hynix(SKHY)$
Micron Earnings Will be a Key Catalyst
The biggest catalyst for the DRAM ETF will be the upcoming Micron earnings, which will provide more color about the industry. These earnings are important because it is the third-biggest player in the HBM industry after SK Hynix and Samsung Electronics. It is also the biggest company in the fund.
Estimates are that Micron Technology’s revenue and profitability growth accelerated in the fourth quarter. The average estimate is that its revenue surged to $51 billion in the quarter, up by 365% from a year earlier. Its earnings-per-share, on the other hand, is expected to move to $3 in Q4’25 to $31.59 last quarter.
Micron’s earnings will likely come in well above these estimates. Still, the stock’s reaction will hinge on its forward guidance, which should offer more clarity on the business and the broader sector. A strong report could push the stock higher, which in turn would lift the DRAM ETF.
However, recently, technology companies like Oracle (NYSE:ORCL) and Broadcom (NASDAQ:AVGO) have dropped after publishing strong results.
Solidigm Potential IPO
Another potential catalyst that may boost the DRAM ETF is the upcoming Solidigm IPO, which is expected to value it at over $150 billion. Such an IPO would have an impact because it is owned by SK Hynix, the third-biggest company in the fund.
Solidigm is a major part in SK Hynix’s portfolio, where it makes high-capacity solid-state drivers (SSD) used mostly in servers and data centers. A successful IPO would be bullish for SK Hynix and the DRAM ETF.
The other potential catalyst is Kioxia Holdings, which is planning a $10 billion listing in the United States, mirroring what SK Hynix did in July.
At the same time, there are signs that these companies, despite their strong revenue growth, are highly undervalued. Micron has a forward price-to-earnings ratio of 14, while SanDisk has a meagre multiple of 8.3. Samsung Electronics has a multiple of 15, while SK Hynix has 9.2.