Down 30% This Year, Here’s Why Micron (MU) Stock Could Have 30% Upside Today

Key Takeaways:

• The 2-Minute Valuation Model values Micron stock at $121 per share in 2 years.
• That’s a potential 30% upside from today’s price of $93 per share, which would signify about 14% annual returns over the next two years.
• Micron is projected to grow EPS by over 750% over the next 3 years as the memory cycle recovers.
• MU stock is trading near cyclical lows despite strong fundamentals and AI-driven demand.
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Micron Technology (MU) is a global leader in memory and storage solutions. It manufactures DRAM, NAND flash, and other semiconductor products that power everything from smartphones to data centers.

Despite facing a challenging memory downturn over the past year, Micron is positioned for a dramatic recovery as AI demand accelerates and inventory levels normalize across the industry.

With MU stock now trading at $93.37 per share, Micron presents a compelling cyclical recovery opportunity for investors seeking exposure to the memory semiconductor boom at an attractive entry point.

Let’s examine why this memory giant could deliver substantial returns as the cycle turns.

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What is the 2-Minute Valuation Model?

Three core factors drive a stock’s long-term value:

1. Revenue Growth: How big the business becomes.
2. Margins: How much the business earns in profit.
3. Multiple: How much investors are willing to pay for a business’s earnings.

Our 2-Minute Valuation Model uses a simple formula to value stocks:

Expected Normalized EPS * Forward P/E ratio = Expected Share Price

Revenue growth and margins drive a company’s long-term normalized earnings-per-share (EPS), and investors can use a stock’s long-term average P/E multiple to get an idea of how the market values a company.

Why Micron Stock Looks Undervalued

Forecast

Based on analyst estimates shown in the chart below, Micron is expected to achieve explosive earnings growth over the next three years.

EPS is projected to surge from $1.30 in fiscal 2024 (ended in August) to $11 by 2027, representing a remarkable 750% total increase.

The earnings recovery shows dramatic momentum, with 2025 expected to deliver an exceptional 438% growth jump to $6.99, followed by solid 57% growth in 2026, and modest growth stabilizing in 2027.

This earnings growth for MU stock is likely to be driven by:

• AI and data center boom: Memory demand from AI training and inference is creating unprecedented growth opportunities.
• Memory cycle recovery: Industry inventory corrections are nearing completion, setting up a strong upcycle.
• Pricing power return: Memory prices have bottomed and are beginning to recover from cyclical lows.
• Advanced node leadership: Micron’s technology leadership in high-bandwidth memory (HBM) positions it for premium pricing.

For our valuation, we’ll estimate that Micron stock will reach $11 in EPS in 2027.

See Micron’s full analyst estimates (It’s free) >>>

Valuation Multiple

Today, Micron stock trades at around 11x forward earnings, below its 12-month historical average P/E of 13.4x, as shown in the valuation chart.

For our valuation, we’ll use a conservative forward P/E multiple of 11x. This is well below the company’s historical average and just above its current multiple.

Fair Value of MU Stock

Using our 2-Minute Valuation Model and applying a conservative approach:

• Conservative 2027 EPS estimate: $11
• Conservative forward P/E multiple: 11x

Expected Normalized EPS ($11) * Forward P/E ratio (11x) = Expected Share Price ($121)

The 2-year expected MU stock price we would get from this valuation is $121 per share.

With Micron stock currently trading at around $93 per share, this implies a potential upside of 30% over the next two years or a 14% annualized return.

A 14% annual return would be pretty decent for investors, given that the S&P 500 index has delivered about 10% annual returns over the last six decades.

Remember, this is just a valuation exercise, and we don’t know for sure what the stock’s price will be in the future.

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What is the Average Analyst Price Target for Micron Stock?

Analysts think Micron stock is undervalued, with an average price target of $123. That points to about 32% upside from where it trades today:

Risks to Consider

Despite the bullish outlook, investors should be aware of several risks that could impact the chip maker’s growth trajectory:

• Memory cycle volatility: Semiconductor memory markets are notoriously cyclical and can experience sharp downturns.
• Geopolitical tensions: Trade restrictions and China tensions could impact Micron’s global operations.
• Competition intensity: Samsung and SK Hynix remain formidable competitors in the memory markets.
• Capital intensity: Memory manufacturing requires massive ongoing capital investments that can pressure returns.

TIKR Takeaway

Micron presents a compelling cyclical recovery opportunity at current levels. The chip stock’s upside potential is driven by a powerful memory cycle recovery story, supported by AI-driven demand growth and inventory normalization, all while trading at historically attractive valuation levels.

While memory semiconductor stocks are inherently volatile, Micron’s technology leadership in next-generation memory solutions and strong positioning for the AI infrastructure buildout create multiple growth drivers.

Is Micron stock a buy over the next 24 months? Use TIKR to check the stock’s analyst price targets and growth forecasts to see if it is undervalued today.

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Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!