Wall Street knows that Micron Technology (MU -4.31%) more than quadrupled its revenue year over year in its fiscal 2026 third quarter. It also notes that Micron guided to $50 billion in revenue for the fiscal fourth quarter, suggesting more than 20% sequential growth.
The stock has plunged since Micron reported earnings, and it's more than 27% off all-time highs. It's a sign that Wall Street continues to underestimate Micron. Here's why the bears are wrong.
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Multiyear deals break the cyclical narrative
The biggest hurdle for Micron is that it operates in a cyclical industry. Memory chip shortages can quickly turn into inventory gluts that erode profit margins and cause revenue to crater.
NASDAQ: MU
Key Data Points
Wall Street is worried about a repeat of Micron's fiscal 2023. During that fiscal year, consumer demand for smartphones and PCs plunged, and memory chip shortages turned into inventory gluts. That resulted in a sharp decrease in memory chip prices, which translated into Micron reporting a nearly 50% year-over-year revenue decline.
The big fear is that AI infrastructure will slow down, and Micron's sales will plunge. Guidance suggests the opposite, but investors are more worried about fiscal 2027 and fiscal 2028.
However, Wall Street seems to be overlooking Micron's new multiyear Strategic Customer Agreements, which "significantly enhance the durability and predictability of Micron's strong financial performance," per the company's Q3 FY26 press release.
AI demand is still in its early innings
Tech giants are scrambling to build their own data centers, secure long-term leases for existing data centers, and raise their capital expenditures whenever they can. This activity does not suggest artificial intelligence spending is slowing down anytime soon. In fact, it implies the opposite.
Artificial intelligence already powers products like ChatGPT and Gemini, which attract many users. This technology is also the bedrock for humanoid robots and autonomous vehicles. As demand for any of those products increases, tech leaders will have to buy more of Micron's chips.
The artificial intelligence market is projected to maintain a 30.6% compound annual growth rate (CAGR) through 2033. While rampant AI capital expenditures are relatively new and Wall Street wonders how long the music will last, Micron has already implied there are multiple years left.
One important thing to note is that AI is already producing products and services people use. Many people are upgrading to paid versions of AI models like Claude and Grok. Agentic AI is gaining momentum because it's a valuable resource for enterprises and consumers.
Micron's memory chips put it at the center of the AI boom. The industry is set to grow, affect many sectors, and introduce new products and services that can quickly become mainstream. That's not the type of opportunity Wall Street should bet against for long.
