Back to top

Image: Shutterstock

Crushing Expectations: Why Micron Remains Undervalued

Key Takeaways

  • Micron has become one of the most profitable companies on Wall Street.
  • The company enjoys unprecedented revenue visibility.
  • A persistent structural shortage in DRAM preserves Micron's pricing power.

Micron Reports Blowout Earnings

Wednesday, Micron ((MU - Free Report) ), the AI memory leader, crushed Wall Street’s earnings expectations on every metric. Once again, the quarter delivered record profits and triple-digit revenue and earnings growth. Thanks to soaring AI demand, Micron has become not only one of the most profitable companies in AI but also one of the most profitable on Wall Street. In addition to the blockbuster quarter, Micron’s Q1 2027 guidance did not disappoint, with CEO Sanjay Mehrotra stating that fiscal 2027 will be even stronger.

Micron reported earnings per share of $33.42, beating Wall Street’s already lofty expectations by 5.73%. Over the past four quarters, Micron has beaten Zacks Consensus Analyst Estimates by a juicy 21% on average. Meanwhile, last night’s earnings release marks the 14th consecutive quarter that Micron has beaten Zacks Consensus Analysts’ Estimates.

Zacks Investment Research
Image Source: Zacks Investment Research

Can Micron Shares Still Move Higher?

Over the past 5 years, Micron shares have delivered investors scorching-hot returns, surging over 1,300%. However, this latest earnings report suggests shares still have room to run. Below are 5 reasons to own Micron shares into 2027, including:

Despite its Performance, Micron is Extremely Cheap

Next quarter, Micron is expected to generate more quarterly profit than NVIDIA ((NVDA - Free Report) ) did in the first quarter of 2026. At the time, NVIDIA generated $40 billion in quarterly profit and had a market cap of $4.8 trillion. Conversely, Micron is expected to do the same, yet has a market cap of just $1 trillion. With a reasonable price-to-earnings ratio of 23.61x, it’s hard for investors to argue that Micron is overvalued.

Zacks Investment Research
Image Source: Zacks Investment Research

Micron Enjoy Incredible Revenue Visibility

According to management, Micron has 26 multi-year take-or-pay agreements, covering more than 35% of expected revenue through 2030. Customer financial commitments have soared to $32 billion from $22 billion last quarter, with the vast majority in cash deposits. Revenue visibility of this magnitude is extremely rare on Wall Street.

Zacks Investment Research
Image Source: Zacks Investment Research

Micron Supply/Demand Imbalance is Intact

Last night, Micron confirmed that the DRAM supply/demand imbalance remains, saying:

“We do not have line-of-sight to when supply and demand will return to balance.”

In other words, Micron can maintain its pricing power and best-in-breed gross margins.

Zacks Investment Research
Image Source: Zacks Investment Research

Physical AI Will Add Another Layer of Demand

Even before the physical demand wave has begun, Micron has delivered spectacular earnings growth. However, Micron expects humanoid robot production to add another layer of demand. Micron confirmed that physical AI can become a significant driver of memory and storage demand by the end of this decade.

Bullish Chart Pattern

Micron is forming the right side of a bullish cup-with-handle chart pattern.

Zacks Investment Research
Image Source: TradingView

Bottom Line

Wednesday, Micron delivered a record-shattering quarter highlighted by explosive earnings growth, unmatched revenue visibility, and a compelling valuation.

Published in