Micron Has Soared in 2026 as Its Profit Skyrockets: Is It Too Late to Buy?

Up significantly already in 2026, Micron Technology (NASDAQ: MU) stock has been a massive winner for investors. This performance is no surprise given the memory specialist's central role in the artificial intelligence (AI) infrastructure build-out.

But the stock pulled back slightly on Thursday, following the company's earnings report this week (of course, shares are still up sharply year to date). The pullback comes despite the report highlighting incredible top and bottom-line growth.

Is this a buying opportunity?

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Record-breaking growth

This week, Micron announced fiscal second-quarter results that once again demonstrate the staggering demand for its memory chips.

Micron's fiscal second-quarter revenue skyrocketed to $23.86 billion, up 196% from $8.05 billion in the year-ago period and representing a massive jump from $13.64 billion in the prior quarter. This top-line momentum was driven by intense demand for both high-performance memory (DRAM) and storage devices (NAND) -- especially across the data center market where AI server builds require immense memory capacity.

Additionally, the company's gross margin expanded to an exceptional 74.4% during the period -- up from 56% in the prior quarter and 36.8% in the year-ago period.

This combination of soaring revenue and significant margin expansion has led to outsize earnings growth. Micron's net income skyrocketed from about $1.6 billion in the year-ago quarter to nearly $13.8 billion in fiscal Q2.

"The step-up in our results and outlook are the outcome of an increase in memory demand driven by AI, structural supply constraints, and Micron's strong execution across the board," explained Micron CEO Sanjay Mehrotra during the company's fiscal second-quarter earnings call.

A costly capacity expansion

But there is more to the story than just revenue and profit margins. The reality of the semiconductor industry is that capturing this kind of growth is incredibly capital-intensive -- and Micron is no exception.

Micron is pouring cash into expanding its manufacturing footprint to meet the escalating needs of hyperscalers and cloud providers. To support its future growth, management expects its fiscal 2026 capital expenditures to exceed $25 billion. That is a staggering amount of capital outlay, creating substantial ongoing cash requirements and execution risk as the company ramps up new fabrication plants across multiple geographies.

While the company's operating cash flow easily covered its capital expenditures in fiscal Q2, its massive spending plan means its future is heavily tethered to the longevity of the current AI boom. If, at some point, demand falters just as this new supply comes online, the industry could quickly pivot from a supply shortage to a supply glut, taking pricing power down (and probably Micron's stock) with it.

Valuation and the final call

As of this writing, the stock's price-to-earnings ratio is about 21. A valuation multiple like this assumes that the AI boom will continue driving robust demand for high-bandwidth memory and that memory will largely remain supply constrained, continuing to bolster Micron's pricing power. Put another way, the stock's current price suggests we are truly in the early innings of this demand cycle.

Overall, I think Micron stock remains a buy for investors who are confident the AI build-out has years left to run. For now, the company is still generating more than enough operating cash flow to offset its capital expenditures. And, more importantly, its products are absolutely critical to the AI revolution.

But I also believe this is a high-risk stock. The memory market is historically cyclical, and those betting on Micron here will need to watch the AI landscape carefully to ensure demand continues to justify the company's aggressive investments.

Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy.