Is Micron Technology a Buy?

Sizzling hot. That's the best way to describe Micron Technology (NASDAQ: MU) right now. The memory chipmaker's business is booming. Its stock is soaring.

However, some investors may worry that Micron's momentum could stall after its shares have more than quadrupled over the last 12 months. Is Micron stock a buy?

The main knock against Micron

Any discussion of Micron will almost certainly point out that it's a cyclical stock. This is arguably the main knock against Micron. And it's true. Micron's business has been notoriously cyclical in the past.

Memory chips are commodities. Their prices fluctuate with supply and demand. Investors who have been around the block a time or two know that supply always eventually catches up with demand, leading to price declines.

This concern explains why Wall Street seems ambivalent toward Micron. The consensus 12-month price target for the stock is slightly below the current share price, even though 38 of the 43 analysts surveyed by S&P Global (NYSE: SPGI) in February rated Micron a "buy" or "strong buy."

The worries about cyclicality can also help explain Micron's low valuation. Despite its stellar performance over the last year, Micron's shares trade at only 13 times forward earnings. That's dirt cheap for an artificial intelligence (AI) stock.

Image source: Micron Technology.

Why things look different this time

The fact that Micron is an AI stock, though, supports the argument that the company's future could be different from its past. High-bandwidth memory (HBM) is a critical component of AI chips. Micron is one of three HBM suppliers -- and the only HBM supplier based in the U.S. The other two (Samsung and SK Hynix) are based in South Korea.

Micron has already sold out its entire HBM supply for 2026. The company is negotiating unprecedented multi-year contracts with customers that give it greater revenue visibility than ever before. In December 2025, Micron announced it was exiting the consumer memory market (historically highly cyclical) to focus on its enormous AI opportunity.

The company doesn't expect AI demand to wane anytime soon. Micron CEO Sanjay Mehrotra said in the December quarterly update that the total addressable market for HBM is likely to grow at a 40% compound annual rate through 2028.

Buy Micron?

I suspect that Wall Street's price target for Micron is overly pessimistic. Although memory chips remain commodities, they're hot commodities -- especially HBM. Micron's sales and earnings should continue to grow, driving its share price higher. Is Micron a buy? I think so.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology and S&P Global. The Motley Fool has a disclosure policy.