Position · Core / Quality Compounders
Micron Technology (MU)
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Thesis StatementMicron sells the physical memory every AI server needs, and at 23x trailing earnings during a genuine pricing supercycle, the multiple hasn't fully caught up to current earnings power.
Core Thesis
Micron is one of the largest memory and storage chip makers globally, vertically integrated and selling into data centers, mobile, and industrial markets, and still trades at a reasonable 23x trailing earnings despite being up sharply on cost — cheap relative...
Financial Metrics
- Market Cap$1.0T
- P/E (TTM)23.31
- EPS (TTM)$44.28
- Div. Yield0.05%
- Price$975.56
Bear Case
Memory is the most cyclical corner of semiconductors. A supply response from Micron and its competitors overshoots demand, pricing craters the way it has in every prior DRAM cycle, and earnings — which are highly levered to price — fall much faster than...
Investment Thesis
- The Thesis
- Micron is one of the largest memory and storage chip makers globally, vertically integrated and selling into data centers, mobile, and industrial markets, and still trades at a reasonable 23x trailing earnings despite being up sharply on cost — cheap relative to how central high-bandwidth memory is to the AI buildout.
- The Catalyst
- AI servers need enormous amounts of high-bandwidth memory, and Micron is one of a handful of credible suppliers of it — my other direct memory bet alongside SNDK, but on the DRAM side rather than NAND, so continued HBM demand growth is the specific driver here.
- The Risk
- Memory is the most cyclical corner of semiconductors — if Micron and its competitors overbuild supply, pricing could crater the way it has in every prior DRAM cycle, and earnings, highly levered to price, would fall much faster than revenue.
- The Connection
- Core to my semiconductor/memory theme alongside SNDK, AMD, and INTC — a second, DRAM-side bet on the same AI-infrastructure demand driving the NAND thesis.
Pre-Mortem Thesis Invalidation Parameters
Codified in advance, before any of these have happened, so a future decision to hold or exit isn't rationalized in the moment. If a condition below is met, the thesis as written is invalidated and the position gets re-underwritten from scratch — not automatically sold, but automatically questioned.
| Metric / Event | Automatic Review Trigger |
|---|---|
| DRAM / NAND Spot Pricing | Turns negative for 2 consecutive quarters as supply overshoots demand. |
| Gross Margin | Compresses for 2 consecutive quarters, signaling the memory cycle has turned. |
| Market cap | $1.0T |
|---|---|
| P/E ratio (TTM) | 23.31 |
| EPS (TTM) | $44.28 |
| Dividend yield | 0.05% |
| Shares outstanding | 1.13B |
| Sector | Semiconductors & related devices |
| EBITDAEarnings Before Interest, Taxes, Depreciation, and Amortization — a measure of operating profitability before financing and accounting decisions. EV/EBITDA compares a company's full value (including debt) to this figure, often used to compare companies with different capital structures. | EV/EBITDA 16.10x |
| PEG ratioPrice/Earnings-to-Growth: the P/E ratio divided by expected earnings growth. Below 1.0 is often read as cheap relative to growth; above suggests the market is pricing in a lot of future growth already. Different providers use different growth-rate assumptions, so figures vary by source. | 7.00 |
| Capex | $25.26B (TTM) |
Valuation Logic
23.31x trailing earnings is a reasonable, almost inexpensive, multiple relative to the scale of the current memory-pricing beat — but that reasonableness assumes today's 78%+ gross margins are durable rather than the peak of a commodity cycle.
About the business
Micron is one of the largest memory and storage chip makers in the world, primarily DRAM with minority NAND exposure. It's vertically integrated and sells into data centers, mobile phones, consumer electronics, and industrial/automotive applications globally.
Why I own it
This is my other direct memory bet alongside SNDK, but on the DRAM side rather than NAND — AI servers need enormous amounts of high-bandwidth memory, and Micron is one of a handful of credible suppliers. It's still up sharply on cost (+202%) despite a recent pullback, and unlike SNDK it's at a reasonable 23x trailing earnings, which is part of why I haven't had to trim it the way SNDK needs trimming.
Risk/Reward Profile
| Bull Case | Bear Case |
|---|---|
| High-bandwidth memory demand for AI servers keeps outstripping supply, DRAM pricing stays elevated through the cycle for longer than historical norms, and Micron's earnings keep growing into a still-reasonable multiple. | Memory is the most cyclical corner of semiconductors. A supply response from Micron and its competitors overshoots demand, pricing craters the way it has in every prior DRAM cycle, and earnings — which are highly levered to price — fall much faster than revenue. |
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