Is the Memory Supercycle Already Priced In? What the Data Says About Micron Stock.

Artificial intelligence (AI) is a hungry technology. It always seems to need more of everything: more power, more data centers, more processors, and -- to the benefit of Micron Technology (NASDAQ: MU) -- more memory.

While it takes powerful parallel processors like Nvidia's graphics processing units (GPUs) or Alphabet's Tensor Processing Units (TPUs) to train and run AI models, those processes also require the chips to rapidly access massive volumes of data. And that necessitates that they be deployed in conjunction with a lot of memory chips and hardware.

But the memory hardware market is dominated by just three companies -- Samsung, SK Hynix, and Micron. And right now, the three of them don't have enough production capacity to make anywhere near as much memory as the tech world needs.

Even Google's new TurboQuant memory compression algorithm, which promises to reduce the need for memory hardware, will only mitigate that problem; it won't solve it. According to SK Hynix Chairman Chey Tae-won, the memory shortage could last until 2030.

So, is the memory supercycle full priced into Micron's stock? I don't think so -- at least, not based on the company's astronomical growth.

Image source: Getty Images.

Thanks for the memories

Micron's business is pretty simple: It designs and produces memory chips. Among other things, it's the maker of the HBM4 memory chips that are being embedded in Nvidia's Vera Rubin platform.

In its effort to focus on meeting the memory demands of the AI data center market, Micron late last year announced it was exiting the consumer PC memory market. It has also broken ground on a new $100 billion factory in New York that, once completed, will be the single largest semiconductor manufacturing facility in the United States.

The memory shortage has allowed Micron to boost its prices significantly, which drove the stock up by around 585% over the past 12 months.

Per Morningstar, Micron's current price/earnings-to-growth (PEG) ratio is 0.46. A PEG ratio of 1 is viewed as indicating that a stock is fairly valued relative to its expected earnings growth. A positive PEG below that suggests that the stock is underpriced. So it seems likely that the full extent of the memory supercycle has not been priced into the stock.

That becomes even more apparent when you look at the company's absurd growth figures.

Something you won't forget

In the second quarter of Micron's fiscal 2026 (which ended Feb. 26), the company recorded revenue of $23.9 billion, which was up 196% year over year. It was also up 75% from fiscal Q1 2026.

It gets even better. Micron has a net profit margin of 41.5% right now, and a healthy debt-to-equity ratio of 0.15, even after its $100 billion investment in a brand new factory.

Looking forward, Micron is projecting Q3 2026 revenue of $33.5 billion, which would be a 260% increase over the $9.3 billion the company generated in Q3 2025 or significantly more than triple its year-over-year revenue.

Growth like that is difficult to price in, and considering Micron's low PEG ratio, it's not even close to priced in. Even if Google's memory compression algorithm reduces the need for the chips somewhat, the memory supercycle is likely to continue for a couple of years at the very least.

And given its partnership with Nvidia and its investments in its production capabilities, Micron is playing the memory supercycle incredibly well and setting itself up to be one of the most dominant tech hardware companies when we do arrive on the other side of that cycle.

Micron might be up by 585% in the last year, but based on every metric, it appears its bull run may still just be getting started. That makes the stock well worth your consideration.

James Hires has positions in Alphabet and Micron Technology. The Motley Fool has positions in and recommends Alphabet, Micron Technology, and Nvidia. The Motley Fool has a disclosure policy.