Micron Technology Looks Like An Undervalued Long-Term Winner

Many chipmakers have rallied due to the artificial intelligence boom. Tech companies have ramped up their spending, much to the benefit of semiconductor firms that can produce the best AI chips. Micron (NASDAQ:MU | MU Price Prediction) missed most of the rally but has been playing catch-up this year. Shares have more than tripled year-to-date as 2025 comes to a close. Superb revenue growth and profit margin expansion have put more focus on the stock’s low valuation, which leaves room for additional upside. 

Momentum Is Building

Micron’s revenue has been accelerating in recent quarters and surged by 56% year-over-year in Q1 FY26. This under-the-radar AI stock is achieving higher growth rates than what we have seen from Broadcom (NASDAQ:AVGO) and Advanced Micro Devices (NASDAQ:AMD) in recent quarters. Micron followed up its high revenue growth with expanding profit margins. Net income almost tripled year-over-year, resulting in a 38.4% net profit margin. Earlier in the year, Micron’s net profit margin hovered at around 20%.

Although Q1 FY26 results were good, Micron CEO Sanjay Mehrotra suggested that future quarters will be even better. “Our Q2 outlook reflects substantial records across revenue, gross margin, EPS and free cash flow, and we anticipate our business performance to continue strengthening through fiscal 2026. Micron’s technology leadership, differentiated product portfolio, and strong operational execution position us as an essential AI enabler, and we are investing to support our customers’ growing need for memory and storage,” he said in the Q1 FY26 press release.

All four of Micron’s key business segments — Cloud Memory Business, Core Data Center Business, Mobile and Client Business, and Automotive and Embedded Business — delivered double-digit year-over-year revenue growth and high operating margins. The lowest operating margin came from the Automotive and Embedded Unit, and that part of the business still had a 36% operating margin.

The Valuation Is Ridiculously Low

Most investors have rushed to buy AI chipmaker stocks, especially after Nvidia (NASDAQ:NVDA) surged by more than 1,300% over the past five years and became the world’s most valuable publicly traded company. Micron doesn’t have those types of gains, but it seems primed to become the next $1 trillion chipmaker, despite its $320 billion market cap. The company’s revenue growth and valuation suggest that it can triple yet again in 2026.

Micron only trades at a 27 P/E ratio after almost tripling its net income in Q1 FY26. Meanwhile, Broadcom and AMD have P/E ratios of 74 and 113, respectively. Micron’s stock can double right now and still be a bargain compared to Broadcom and AMD.

It gets even more absurd when you look at other metrics. The forward P/E ratio considers what a company’s P/E ratio will look like next year based on current growth trends. Micron has a microscopic 9 forward P/E ratio compared to Broadcom and AMD, both having forward P/E ratios of 35. Micron stock would have to quadruple to have the same forward P/E ratio as Broadcom and AMD. To top it off, Micron is growing at a faster rate than both companies.

Micron Is The Dream Stock For Value And Growth Investors

It’s not every day that investors stumble across a stock that is good for value investors and growth investors. Micron trades at bargain basement levels while offering substantial long-term growth opportunities. The company has a real shot at a strong 2026 rally that mirrors its 2025 successes. Micron has the potential to become a $1 trillion company in 1-3 years. 

Micron anticipates Q2 FY26 revenue ranging from $18.3 billion to $19.1 billion. The low end of guidance implies that revenue will more than double year-over-year. If Micron maintains a net profit margin close to 40%, its profits can more than quadruple year-over-year. 

The writing for a strong 2026 is on the wall, but Micron is priced as if it is a laggard in the AI race. Even Qualcomm (NASDAQ:QCOM) manages to have a higher P/E ratio than Micron despite having less promising prospects. These types of irrationalities don’t last forever in the stock market. Micron presents an asymmetrical risk/reward opportunity that favors long-term investors.