Micron's (MU +2.30%) 52-week high is around $1,250, but recently it was priced at less than $920 per share. However, if you take a look at where Wall Street thinks it's going, the average one-year price target on the stock is about $1,500. That's substantial upside from here, and makes Micron an easy buy if they're right.
But are they? Let's take a look.
Image source: The Motley Fool.
Pricing Micron's stock isn't easy
Micron is growing at an unreal pace. During the last quarter, revenue and profits skyrocketed.
MU Revenue (Quarterly YoY Growth) data by YCharts
That trend is expected to continue, with next quarter's revenue growth projected to be about 349%. All of this is occurring because of heightened demand for memory chips, which Micron manufactures.
The AI data center build-out trend has consumed nearly all production capacity for memory chips. There is still more demand than what's available, so prices are rising as a result. This one-two punch is helping boost Micron's results, but the question is, how long will it last? If you knew the answer to that, you'd be a very rich investor because you'd be able to time Micron's movements up and down perfectly.
NASDAQ: MU
Key Data Points
Micron is known as a cyclical business because demand for its products goes up and down. These cycles last for different time periods, but it's pretty well agreed that this cycle is probably the longest and biggest that Micron has experienced. In fact, Wall Street analysts expect Micron's revenue growth for fiscal year 2027 (ending August 2027) to be 85%. That showcases there's still plenty of growth left in Micron's tank, yet the stock is priced at a fairly low valuation.
Micron trades for 12.4 times this year's earnings and 5.9 times FY 2027's earnings.
MU PE Ratio (Forward) data by YCharts
For reference, the minimum trailing price-to-earnings ratio over the past decade was 21.8, but its lowest point was 2.4. Those are some wide-ranging results, and if you're caught on the wrong side of things, Micron could turn out as a bust.
However, I think it's a safe investment throughout 2027, as there are still significant supply constraints hurting the industry. With more capacity coming online next year, it may help stabilize prices, but there's still no guarantee that Micron will have enough capacity to meet demand. As a result, I think Micron's stock is a solid buy, but investors need to keep a watchful eye on industry conditions.
