A 300% stock rally would normally be enough to make investors question whether a company has become too expensive. Not in Micron Technology Inc.’s (NASDAQ:MU) case.
Despite soaring more than 300% year-to-date and ranking among the Nasdaq 100‘s best-performing stocks, Micron still trades at about 26 times trailing earnings and just 7.5 times forward earnings (per Benzinga Pro data)—below AI heavyweights Nvidia Corp. (NASDAQ:NVDA) and Broadcom Inc. (NASDAQ:AVGO).
The disconnect suggests Micron’s explosive earnings growth has kept pace with, and perhaps even outstripped, its remarkable share price gains.
Micron’s Earnings Are Growing Even Faster Than Its Stock
Micron’s AI-fueled rally has been driven by surging demand for high-bandwidth memory (HBM) and other advanced memory products powering AI servers.
That demand is translating into profits at a pace few companies can match.
The company has posted EPS growth of more than 780% over the past year, while analysts expect earnings to grow another 109% over the next 12 months.
Those numbers help explain why Micron’s valuation has remained relatively restrained despite the stock’s enormous run. Instead of investors simply bidding up the shares, rapidly expanding earnings have prevented valuation multiples from stretching to the same extent seen in other AI names.
Nvidia And Broadcom Still Command Richer Multiples
The comparison becomes more interesting when stacked against two of AI’s biggest winners.
Nvidia, now the world’s most valuable company, trades at roughly 30 times trailing earnings and about 22 times forward earnings.
Broadcom, another major beneficiary of AI infrastructure spending, carries a trailing P/E of around 62 and a forward multiple near 32.
Micron, by comparison, trades at approximately 26 times trailing earnings and just 7.5 times forward earnings.
That doesn’t necessarily make Micron undervalued. Each company has different business models, margins and long-term growth profiles. But it does suggest investors are assigning a more conservative valuation to the memory maker despite its outsized earnings growth.
AI’s Memory Boom May Still Have Room To Run
For years, memory chipmakers were viewed as cyclical businesses, with earnings swinging sharply alongside supply and demand.
The AI boom is beginning to change that narrative.
High-bandwidth memory has become one of the most critical components in AI servers, giving companies like Micron a larger role in the AI infrastructure buildout than many investors anticipated just a few years ago.
That shift is also reflected in stock performance. While Nvidia remains the face of the AI revolution, Micron has quietly delivered one of the strongest returns in the Nasdaq 100 this year.
The bigger surprise may not be the rally itself. It’s that after a gain of more than 300%, Micron still trades at a lower earnings multiple than Nvidia and at less than half Broadcom’s valuation, highlighting how rapidly the company’s fundamentals have strengthened alongside the AI boom.
Foto: Samuel Boivin / Shutterstock
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