It's no secret that the stock market is overvalued. The S&P 500's (^GSPC 1.52%) current price-to-earnings (P/E) ratio is sitting at just over 30, which is nearly double the index's average P/E of 16 over its entire history.
The S&P 500's P/E ratio has only been higher than it is now three times, and none of those ended well for investors. First was the dot-com crash from 1999 to 2001. Second was the global financial crisis, which occurred from 2007 to 2011. And most recently was during the peak of the COVID-19 pandemic.
The circumstances of each of those crashes were very different, but the common thread remains and shows that a high P/E for the S&P 500 is generally not a good sign for the stock market in the near future.
Regardless of the market's broader conditions, though, a good value is always worth a look. And that's exactly what Micron Technology (MU 3.21%) is offering today.
NASDAQ: MU
Key Data Points
I forgot to remember to forget
Micron focuses on a segment of the tech industry that has flown under the radar. In all the talk about artificial intelligence (AI) and data centers, there's been relatively little mention of the memory hardware advanced AI algorithms need, despite the shortage of that hardware.
Image source: Getty Images.
When training an AI model, the data it's trained on and what it has learned from that data must be kept somewhere. Think of it like studying for a test; you need to commit the information you learned to memory so you can apply it to new problems.
And AI models need a lot of data to learn from. I couldn't find an official number from OpenAI, but estimates I could find put the total training data for GPT-5 at roughly 281 terabytes. Add in the data storage needed for any inferences the algorithm makes from that data, and you're looking at an even larger number.
AI is hungry for memory, and it's causing price spikes and shortages. Reuters reported that Samsung raised the prices of some of its memory chips by 60% in November, in response to the shortage. Consumer Reports claims the memory shortage is so bad that laptop and phone prices could spike next year as a result.
Enter Micron, which specializes in computer memory and produces some of the best on the market, catering to applications ranging from data centers to autonomous cars. And Micron's numbers speak loudly and clearly to the quality of its products.
Somehow, the market forgot about Micron
Micron's current P/E ratio is 22, and I can't figure out why it's so low.
First, that's very low, not only compared to the S&P 500 but also to Micron's tech industry peers, also involved in AI hardware.
| Company | Trailing P/E Ratio | Forward P/E Ratio | Revenue Growth (Most Recent Quarter) |
|---|---|---|---|
| Micron Technology | 22 | 8.5 | 57% |
| Advanced Micro Devices | 124.8 | 85 | 36% |
| Intel | 130 | 61.7 | 3% |
| Texas Instruments | 36 | 32 | 14% |
| Analog Devices | 67.6 | 60 | 26% |
Dara source: Respective company filings as of Dec. 23. Table by author.
On top of that, Micron reported a healthy gross margin of 57% compared to 40% for Q1 2025. Net income more than doubled from $2 billion in Q1 2025 to just under $5.5 billion in its latest quarter. Finally, diluted earnings per share (EPS) increased 167% over Q1 2025. Such numbers show a company worth remembering.
A company set to profit from the memory shortage
All that already paints a pretty picture, but Micron has also absolutely trounced both the S&P 500's and its peers' returns this year.
Micron is up over 200% in the past year, compared to the S&P's 16.5% gain. It's also more than five times Nvidia's 38.5% return.
So, Micron is not only cheaper than the S&P 500, it's cheaper than almost all of its peers, while experiencing significantly higher revenue growth and operating in a sector of the AI industry that reportedly saw 88% market growth in 2024, according to TechInsights.
Put all that together, and I think we have a stock with serious upside potential next year as AI puts the squeeze on computer memory hardware and drives prices even higher.
