Micron's Share Price Dip Presents a Compelling Buying Opportunity

Micron (NASDAQ: MU) has lost more than 20% of its value in less than two weeks amid a broader correction among AI stocks. Most investors have been conditioned to expect these sorts of stocks to keep rising steadily, especially as tech giants continue to ramp up their AI infrastructure spending.

The fundamentals of its business suggest Micron's stock rally should continue, so when its price movements defy expectations, it creates buying opportunities for long-term investors.

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Micron's combination of valuation and revenue growth is rare

Micron may be in a class of its own when it comes to valuation and revenue growth.

In its fiscal 2026 third quarter, which ended May 28, the company more than quadrupled its revenue year over year, blowing past its previous guidance. Even its fiscal fourth-quarter guidance was solid, with more than 20% sequential growth expected.

Yet the stock trades at a P/E ratio of 22, which is lower than the S&P 500's (SNPINDEX: ^GSPC) valuation. Meanwhile, few companies in the benchmark index came anywhere close to that kind of revenue growth. The valuation appears even more absurd when looking at Micron's 6.4 forward P/E ratio. That metric reflects expected future growth, making the current dip all the more jarring.

The company even hinted in its earnings release a few weeks ago that it is breaking free from the cyclical nature of the memory chip business. "Multiyear Strategic Customer Agreements will significantly enhance the durability and predictability of Micron's strong financial performance," said CEO Sanjay Mehrotra.

The fundamentals are strong and strengthening, which makes the recent stock price slide more difficult to justify. It also comes as fellow memory product provider Samsung reported a higher quarterly profit than Apple or Nvidia. Micron is riding that same tailwind and looks poised to expand its market share.

Micron's top customers are rushing to spend more on AI infrastructure

The string of strong quarters that Micron has put up lately has not been a fluke. They are the result of the company's largest customers ramping up their AI expenditures and competing with each other to gain market share in lucrative opportunities.

Amazon recently said it would issue at least $25 billion in corporate bonds to raise funds for its AI infrastructure build-out. Meanwhile, Alphabet completed an $84.75 billion equity raise a little earlier.

This spending comes from highly profitable companies that are scaling up their products and services thanks to AI. A meaningful portion of the money raised by their financial moves should flow rapidly into Micron's coffers since AI servers require copious amounts of memory chips.

Micron is even well positioned for the expected push into physical AI. Humanoid robots and self-driving vehicles will also need Micron's memory chips. While hyperscalers' big deals get the most attention, Micron also struck a multiyear agreement with Ford Motor Company to supply the memory products for its next-gen vehicles. Deals can branch well beyond tech giants as more industries embrace AI. It all bodes well for Micron despite the recent stock price action.

Marc Guberti has positions in Apple. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Micron Technology, and Nvidia. The Motley Fool has a disclosure policy.