Investors in Micron Technology (MU 0.56%) must be frustrated. On March 29, the memory and storage manufacturer announced solid results for the second quarter of fiscal 2022 ended March 3. Revenue surged 25% year over year while net profits more than tripled.

Yet, the share price has since fallen by about 7% since the earnings release. Investors might be worried about the potential impact of the ongoing war on Micron's business. Still, there are good reasons to be optimistic about Micron, especially with its expected strong performance for the rest of the year.

Employees discuss product design.

Image source: Getty Images

A bird's-eye view of Micron's latest performance

Micron is on fire. After delivering a solid performance in the fiscal year 2021, it sustained that momentum into the fiscal year 2022. For the latest quarter, both revenue and margin exceeded the high end of its guidance, net income surged 275% to $2.3 billion, and operating cash flow came in at $3.6 billion, up from $3.1 billion the year before.

The growth was broad-based across all segments. In particular, the compute and networking, storage, and embedded segments all grew more than 30% year over year. Data centers and auto markets performed strongly, with the former growing 60% year over year and the latter hitting a new record.

Operationally, Micron ramped up the shipments of its industry-leading memory (1-alpha DRAM) and storage (176-layer NAND) in the quarter. In addition to contributing meaningful revenue, these new products also helped reduce front-end costs. Moreover, more customers have approved the use of these new products during the quarter, which will further drive revenue growth in the coming quarters.

In sum, it was a strong quarter with solid financial numbers and good operational progress.

How the war in Ukraine is impacting Micron's operations

Many companies face risks related to Russia's invasion of Ukraine. While the full impact remains uncertain, the global semiconductor industry is already facing supply chain disruption.

In particular, the regions affected by the war are suppliers of noble gases and other critical minerals used in semiconductor manufacturing. Luckily, Micron has a diversified source for these materials globally, which will mitigate the risk of the unavailability of materials. It also holds enough inventory to sustain production for the near term.

Still, the company expects an increase in cost as it tries to secure certain raw materials that could be at risk. Consequently, it will likely face margin pressure in the coming quarters.

What to expect from Micron

After delivering solid growth in the first and second quarters of the fiscal year 2022, Micron guided for even better performance in the third quarter. It expects to hit $8.7 billion in revenue, which would be a new record.

Further, the tech company reiterated that it is on track to deliver a new record in revenue, healthy profits, and strong cash flow for the fiscal year 2022. Strong demand from across almost all segments, particularly data centers, auto and industrial, and graphics are driving this growth.

Beyond that, Micron is well-positioned to sustain its momentum as it rides some multi-year (or potential multi-decade) trends such as artificial intelligence, 5G, and smart-car adoption. And with its market-leading products -- such as 1-alpha DRAM and 176-layer NAND -- the company is set to grow customer wallet share and attract new customers.

What about Micron's valuation?

Overall, Micron should deliver an outstanding year. Yet, the tech company is trading at a price-to-earnings (P/E) ratio of less than 10. Comparatively, NVIDIA Corporation (NVDA -1.91%) is trading at a P/E ratio of 69.

While I'm not suggesting that Micron should trade at a valuation comparable to NVIDIA, the gap between the two seems too wide to ignore. Either Micron is cheap, or NVIDIA is expensive. I err to the former. Savvy investors who want exposure to this growing industry would be wise to note the opportunity.