Is Micron Stock the Best Buy Now?

Key Points

• Micron is benefiting from AI-powered demand for high-bandwidth memory and advanced DRAM.

• The company's aggressive investment in new fabs and DRAM equipment positions it for long-term growth.

• Micron is also trading at a reasonable valuation.

• 10 stocks we like better than Micron Technology ›

Micron Technology (NASDAQ: MU) has proved to be one of the biggest winners of the global artificial intelligence (AI) infrastructure buildout. While semiconductor companies like Nvidia and Broadcom often take center stage, Micron also plays a crucial role in supplying the memory and storage required for AI systems.

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Shares of Micron have gained nearly 97.7% so far in 2025. The company also reported record results for fiscal 2025 (ended Aug. 28, 2025) on Sept. 23. So, investors are now asking: Is this stock one of the best buys in the market today?

Stellar financial performance

Fiscal 2025 has proved exceptionally strong for Micron. The company's revenue surged nearly 50% year over year to $37.4 billion, while its gross margin expanded by 17 percentage points to 41%. Earnings per share also soared 538% year over year to $8.29.

The growth has been primarily driven by robust demand for data centers. The company's data center segment accounted for 56% of revenue with a 52% gross margin in fiscal 2025. Memory products, including high-bandwidth memory (HBM), high-capacity dual in-line memory modules (DIMMs), and low-power server DRAM, collectively contributed $10 billion in revenue in fiscal 2025, representing a more than fivefold increase year over year. Micron has thus emerged as a significant beneficiary of the ongoing AI boom.

Demand-supply mismatch

Management expects Micron's business momentum to continue in fiscal 2026. For the first quarter, the company is guiding for record revenue in the range of $12.2 billion to $12.8 billion, a gross margin in the range of 50.5% and 52.5%, and earnings per share in the range of $3.60 to $3.80.

Micron expects DRAM bit demand to grow in the high teens and NAND (flash memory for long-term storage) demand to expand in the low to mid-teens during calendar 2025. But the company's bit supply growth will remain below industry demand levels for both non-HBM DRAM and NAND, keeping supply tight. This mismatch between limited supply and high demand pushes unit prices upward.

Management also expects sequential improvement in its gross margin in the second quarter, supported by tight DRAM supply and below-target DRAM inventory levels, driving strong pricing. At the same time, conditions in the NAND business are improving. Micron is also shifting more of its memory and storage production toward higher-value markets, such as data centers and AI servers, which should continue to boost profitability.

Product innovation

Micron's HBM offerings, which are preferred for their faster data transfer speeds and higher energy efficiency, are being increasingly used to run complex AI workloads. Micron's HBM has reached an annualized revenue run rate of nearly $8 billion, driven primarily by strong demand for its high bandwidth memory third-generation extended (HBM3E) products. The company's HBM market share is expected to be in line with its overall DRAM market share in the third quarter of calendar year 2025.

Additionally, Micron has already shared samples of the more advanced high-bandwidth memory fourth-generation (HBM4) products with customers. Micron claims HBM4 is faster and more efficient than every competing product -- which can prove to be a solid competitive edge while selling to customers scaling their AI infrastructures.

Micron is also gearing up for HBM4E, the next step in high-bandwidth memory, which will enable customers to customize the base chip that manages the memory stack, with manufacturing support from Taiwan Semiconductor Manufacturing. This customization could lead to higher profits and stronger customer relationships.

Storage is another growth driver. Micron is already shipping advanced NAND storage to support AI inference and large-scale server storage. As the supply of hard disks remains tight, demand for NAND is expected to continue growing.

Aggressive investment strategy

Micron is investing aggressively to expand its memory and storage supply. The company invested $13.8 billion in capital expenditures in fiscal 2025 and anticipates investing even more in fiscal 2026 to fund DRAM front-end equipment for technology node migration and construct new fabs. The company expects its faster 1-gamma DRAM node to contribute the majority of the DRAM supply in 2026, while the 1-beta node will supply the HBM market in 2026. The company is building new fabs in Idaho and expanding capacity in Japan and Singapore. This implies that the company is working hard to capitalize on the growing global demand for memory.

Micron also boasts a strong balance sheet, with $15.4 billion in liquidity and $14.6 billion in debt with a weighted average maturity of 2033. The company also expects free cash flow to further improve in 2026. This gives the company sufficient financial flexibility to fund future growth initiatives.

Could Micron be the best buy now?

For Micron to maintain its growth trajectory, enterprise AI spending must keep pace. Micron believes trillions of dollars will be invested in data center infrastructure over the next few years, with memory commanding a significant share of that budget. If management's projections prove correct, HBM alone could reach a target addressable market of $100 billion by 2030. Micron is well-positioned to capture a large share of this market.

Analysts are forecasting Micron's earnings per share to be $11.59 and $12.47, respectively, for fiscal 2026 and fiscal 2027. Micron trades at nearly 12.4 times forward earnings estimates, more like a cyclical commodity memory player than a key enabler of the global AI infrastructure.

However, as Micron solidifies its position in the AI supply chain, Wall Street may assign it a higher multiple, in line with other core AI infrastructure plays that often trade at 18 to 25 times forward earnings. This can translate into a share price in the range of $224 to $311 by fiscal 2027 -- implying an upside of 34.6% to 86.8% in the next two years.

Micron faces significant execution risk and some uncertainty due to tariffs. Despite this, with its robust product strategy and strong financials, the company can weather these challenges. Hence, as long as AI infrastructure spending stays strong, Micron will continue to be an attractive pick for long-term investors.

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Manali Pradhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.