Micron Slips 9% in a Month: Is This the Right Time to Buy MU Stock?

Micron Technology, Inc. MU has lost some of its momentum after a stellar run earlier this year. The stock has fallen 9.4% over the past month, much worse than the Zacks Computer and Technology sector's 2% decline. At first glance, such a sharp pullback may look concerning. However, a closer look suggests that the weakness has more to do with broader market sentiment than any deterioration in Micron's business.

The recent selling has not been limited to Micron. Other memory and storage companies, such as Sandisk SNDK, Western Digital WDC and Seagate Technology STX, have also come under pressure. Over the past month, Sandisk, Western Digital and Seagate Technology have declined 18.2%, 5.6% and 2.7%, respectively. This indicates that investors are trimming exposure to the memory and storage space as a whole rather than singling out Micron.

Micron One-Month Price Return Performance

Image Source: Zacks Investment Research

The sell-off has been driven by two key concerns. First, investors are debating whether hyperscalers will earn attractive returns on their massive AI investments. Second, memory stocks rallied sharply in the first half of 2026, prompting many investors to lock in profits after strong gains.

Despite this negative sentiment, Micron's underlying business remains strong. The company remains one of the biggest beneficiaries of the AI infrastructure boom, and the demand outlook for its products continues to improve.

AI Memory Demand Remains Micron's Biggest Growth Driver

AI is transforming the memory industry, and Micron is well positioned to benefit. Training and running advanced AI models require much larger memory capacity and significantly higher bandwidth than traditional computing workloads. This is driving strong demand for high-bandwidth memory (HBM), DDR5 DRAM and advanced data center SSDs, where Micron has built a strong portfolio.

The spending plans of major cloud providers further reinforce this opportunity. Amazon, Microsoft, Alphabet and Meta Platforms are expected to invest nearly $700 billion in capital expenditures during 2026, with AI infrastructure accounting for a significant share of that spending. Every new AI server requires substantially more memory than previous-generation systems, creating a powerful demand tailwind for Micron.

The company has also strengthened its competitive position through product innovation. Its latest HBM solutions deliver higher capacity, better performance and improved power efficiency, making them attractive for AI accelerators used by leading chipmakers and cloud providers. Demand has been so strong that Micron has already sold out its HBM production for calendar year 2026, while a meaningful portion of its 2027 capacity has already been reserved under long-term customer agreements.

As enterprises continue expanding AI deployments, memory content per server is expected to keep rising. This gives Micron a long runway for sustained revenue growth.

MU’s Results Show the AI Opportunity Is Already Paying Off

Micron's financial performance clearly shows that AI demand is translating into real business growth.

In the third quarter of fiscal 2026, revenues surged 346% year over year to $41.46 billion. The company also signed 16 strategic customer agreements across the data center, consumer and automotive markets. These agreements cover nearly 20% of expected DRAM volumes and about one-third of NAND volumes over the contract period, providing strong revenue visibility.

The company is also selling a larger mix of premium memory products, allowing profits to grow much faster than shipment volumes. Non-GAAP earnings per share jumped to $25.11 from just $1.91 a year ago, while both revenues and earnings comfortably exceeded analysts' expectations.

Micron Technology, Inc. Price, Consensus and EPS Surprise

Micron Technology, Inc. price-consensus-eps-surprise-chart | Micron Technology, Inc. Quote

Profitability improved sharply as better DRAM and NAND pricing combined with rising shipments of AI-focused memory products. Non-GAAP gross margin expanded to 84.9% from 39% a year earlier. Non-GAAP operating income climbed to $33.68 billion from $2.49 billion, while operating margin rose to an impressive 81.2% from 26.8%.

These numbers highlight Micron's strong pricing power and ability to convert booming AI demand into significantly higher earnings.

At the same time, management continues investing aggressively in advanced manufacturing and next-generation memory technologies. These investments should help Micron defend its technology leadership and meet growing customer demand over the coming years.

Micron Still Looks Undervalued

Despite its strong earnings growth, Micron's valuation remains surprisingly modest. The stock currently trades at a forward 12-month price-to-earnings (P/E) ratio of just 5.88, well below the sector average of 21.26.

Micron Forward 12-Month P/E Ratio

Image Source: Zacks Investment Research

Micron also trades at a discount to several memory peers. Sandisk trades at a forward P/E of 7.45, while Seagate Technology and Western Digital trade at 23.29 and 27.30, respectively.

A low valuation alone is not enough to justify buying a stock. However, when that valuation is backed by explosive earnings growth, expanding margins and powerful long-term industry trends, it becomes much more compelling. Micron checks all of those boxes.

Conclusion: Buy Micron Stock

Given Micron’s leadership in AI memory, strong execution, expanding profitability and inexpensive valuation, the recent pullback appears to be a buying opportunity rather than a reason for concern. Investors looking to benefit from the ongoing AI infrastructure buildout should consider buying Micron stock at current levels.

Currently, Micron sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Research Chief Names "Single Best Pick to Double"

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research