Micron earns peak margins on AI memory shortage. Normal profits are far lower, so the shares fall to $860 in twelve months.
Key points
- $54.2 billion revenue in fiscal Q4 2026, up sharply from $11.3 billion in fiscal Q4 2025 on AI pricing.
- 69.5% net margin in fiscal Q4 2026 shows a cyclical peak, not a new normal.
- $860 per share target in twelve months is 21% below $1,087 per share today on normal earnings.
The call
The market expects perfection today. At $1,087 per share today, Micron trades at 7 times next quarter earnings on an annual basis. That run rate is $151 per share on an annualized basis this year, double $74 per share for the last twelve months. That needs peak profit to last forever.
Quarterly revenue jumps sevenfold in a year ($ billions)- Revenue reported
- My forecast
SEC XBRL facts to May 2026 plus Sep 30 release; Q1 FY27E is guidance midpoint.
Reversion looks likely from here. Memory cycles as high prices invite new supply, and 85% gross margin last quarter invites that response. High-bandwidth memory (fast memory for AI chips) cannot stop that cycle. My normal $57 per share for a normal year is far below peak, worth $860 per share in twelve months.
Valuation
| Estimate | Figure |
|---|
| Peak revenue in fiscal 2027 | $235 billion |
| Peak net margin in fiscal 2027 | 65% |
| Peak earnings in fiscal 2027 | $133 per share |
| Normal earnings in a normal year | $57 per share |
| Target in twelve months at 15 times normal earnings | $860 per share |
What Micron is worth on normal earnings ($ per share)My estimates at 15 times earnings; current price shown for scale, Oct 7 2026.
Fifteen times normal earnings in a normal year is a full market multiple for a cyclical chip maker. Peak earnings in fiscal 2027 at 8 times peak earnings equal today's price, so buyers pay for the peak. Trough earnings of $25 per share in a downturn show the loss if wrong.
Risks
- AI demand stays tight through fiscal 2027, which you would see in rising contract prices each quarter and longer customer deals.
- New factories stall into calendar 2028, which you would see in delayed plant starts each quarter and slow bit growth.
- Customer deposits lock high prices for fiscal 2027, which you would see in growing prepaid balances each quarter and binding order terms.
What would change my mind
Proof that multiyear customer deals fix both price and volume through a downturn would make me revisit this sell.