Here's the Price Where I'd Start Considering Buying Micron Stock

Micron Technology (NASDAQ: MU) has been one of the top-performing stocks in 2026. Its price jumped from less than $400 per share at the end of the first quarter to almost $1,200 per share by the end of the second quarter. Since then, however, it has retreated, and now sits about 18% below its peak. Overall, that leaves it up by almost 250% year to date.

Investors who missed out on the incredible run-up in the stock price this year may be wondering whether the pullback is a buying opportunity. But at around $990 per share, the stock still looks too expensive for me. I won't start considering the stock until it trades around $525, based on what we know about the company and its outlook today.

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Here's why Micron is still too expensive for me

Investors might look at Micron's forward P/E ratio of just over 6 times estimated earnings and think the stock is insanely cheap. In my opinion, that price is still above its fair value based on a reasonable outlook for the memory chip industry.

Memory chips are, for all intents and purposes, a commodity product. A chipmaker could package a Micron chip with its AI accelerator and achieve results very similar to those it would get with a chip from SK Hynix or Samsung. As a result, the ability of any single company to increase its chip supply will affect pricing for every other company in the industry. That puts each of them in a prisoner's dilemma: During periods of high demand and short supply (the memory market's current condition), they all must build new production capacity to avoid losing market share. But in doing so, they create the conditions for a future oversupply, which ultimately leads to slumping prices and a decline in profits. This is the pattern that the memory market has always followed.

Micron's current earnings cycle is entering its late stages. Analysts currently project its earnings will peak in 2028. The drop in earnings in 2029 could be substantial, as it doesn't take a large price decline to have a big impact on earnings for such capital-intensive businesses.

Micron has historically traded at earnings multiples between 3 and 8 times peak earnings around cyclical peaks. Even so, the stock has declined even as its P/E ratio has increased in some cases where earnings declines exceeded expectations.

The risk with Micron isn't that an earnings peak isn't priced into the stock. That's evident from its current P/E ratio. It's that the drop in earnings could be more significant than expected. To protect that downside, a 3-times peak earnings multiple seems like a safe price to pay for the stock, and one that would still provide some upside through the rest of the earnings cycle. Analysts currently expect earnings per share to peak around $178 in 2028. I round that down to $175 and multiply by three to get a $525 price. That's where the stock would start to look interesting to me.

That target could change as Micron, SK Hynix, and Samsung provide updates to their progress. Any signs of pricing growing faster or slower than expected, increases in data center capital expenditures, or updated timelines for the construction of new chip foundries could meaningfully alter the longer-term earnings projections. Based on what's known today, though, I won't be interested in buying Micron stock until it trades much lower.

Adam Levy has 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.