If You're Not Buying Micron Stock Right Now... You'll Miss Out on History

Micron just dropped earnings and the numbers were absolutely historic. Revenue came in at $41.5 billion for the quarter. That crushed Wall Street expectations by over $5 billion. And get this, that is a $346% jump from just one year ago. The stock shot up 16% immediately after hours, hitting new all-time record highs. Wall Street analysts are tripping over each other to raise their price targets. And the bulls are sending one message loud and clear. If you are not in Micron right now, you're missing out on a historical run. The AI memory boom, they say, changes everything. And today, I'm going to give you both sides of the argument completely. And then we're going to run the numbers and find out what Micron is actually worth based on my own assumptions. And guys, what Micron just did absolutely blows away the growth that Nvidia had when they started their historical run. So, let me give you a quick background on this company. Micron was founded in 1978. And I love this detail. They started in the basement of a dentist office in Boise, Idaho. Four guys with a dream of building memory chips. That is a 100% true story. They spent the next few decades making DRAM and flash memory. Basically, these are the chips that store and move data inside computers and phones. For most of its life, this is what Wall Street called a cyclical stock. That means when memory chips prices were high, Micron made a ton of money. When prices fell, Micron got crushed up and down, boom and bust over and over again. Investors who own the stock had to have a very strong stomach. Then AI changed everything. See, the new AI chips, the ones powering Chat GPT, the one inside Nvidia's data centers, they're incredibly hungry for memory. a special kind of memory called high bandwidth memory or HBM. And Micron is one of the very few companies in the world that can actually make it. And here's where the story gets really interesting. Micron started this year with a stock sitting around $295 per share. Wall Street was starting to figure out that there was a serious shortage of AI memory. The stock started to climb. Then last week, Micron reported those earnings and the numbers were unlike anything this company has ever seen in its entire 47-year history. Revenue of 41.5 billion in one single quarter. One year ago, that same quarter brought in 9.3 billion. That is a 346% jump in one year. The stock jumped well over 1,200 and now still trading above the earnings number. And that 1,200 plus range was an all-time record high. And the market cap had hit over $1.3 trillion. Guys, here it is. 345% increase in revenue. Gross margin up 45. Guys, I cannot tell you how incredible this is. To take a gross margin from 39% to 85%. Your first question might be, what's gross margin? Every extra unit they sell, the direct costs are taken out, and that is their profit for every extra unit. I will be honest with you guys. This number jumping up this much tells me is this sustainable I have to ask that question because if this is sustainable this is above Nvidia operating income 2.5 billion to 33.6150% 61,250% growth non-GAAP net income 2.1 billion to 28.9 another 1,200 and some percent and diluted earnings per share $1.91 to 25 bucks another 1,200% increase guys here's Q2 of 2026 to Q3 one quarter difference not going to the previous year just one just one quarter revenue up 73% DRAM revenue alone up 66 and a.5% Their ND revenue up 98%. Gross margin. So, as you can see, the gross margin kept on climbing. This one went from 75% to 85. EPS doubled. Free cash flow more than doubled. 165% increase. But guys, it's not just the quarter they reported that has Wall Street going crazy. It's what comes next. Micron just told investors what they think they're going to earn next quarter, and the numbers are absolutely staggering. Even going to next quarter, they expect 20% revenue growth from last quarter. They expect 23 and a.5% growth on their earnings per share and gross margin growing slightly from the 84.9% to 86%. And here's the part that really got Wall Street's attention. Micron announced 16 long-term customer agreements that lock in roughly hundred billion in future revenue. Guys, these are not handshakes. These are contracts. Meaning the AI companies building out data centers have already committed to buying Micron's memory because there's not enough of it to go around. The demand is there. The contracts are signed. The question is, at what price does this stock make sense to buy? I will show you here in a few minutes. But first, let's look at a few bull and bare cases so we can see what both sides have to say. Bull case number one, AI needs memory like never before. and Micron has it and it's probably going to increase. Every time you use chat GPT, every time an AI model thinks, every time a data center runs an AI workload, it needs memory. It needs a lot of memory. Specifically, a special kind of memory called high bandwidth memory, like I mentioned before, HBM. And the AI chips that Nvidia and others are building require three to four times more wafers to produce than regular memory chips. three to four times, guys. That means even if Micron is running their factories at full speed, the supply cannot keep up with the increase in demand that we're experiencing. And when supply cannot keep up with demand, prices go up. Micron's pricing power right now is unlike anything they've had in their history. And the bulls say this is just the beginning. That's what I meant earlier when I said look at their gross margin. Is it sustainable? They can basically name their price right now because people are willing to pay. Bullc case number two, the boom and bust cycle is over. Remember when I said Micron was historically a cyclical stock, up when chip prices were high, crushed when they fell. The bulls say that the era is done. And here's why. Micron just signed those 16 long-term customer agreements worth roughly hundred billion dollars in future revenue. These are not just promises. Again, customers have put up deposits and signed contracts. And these contracts have price floors built in. Meaning even if the market softens, Micron gets paid a minimum amount. The AI companies need this memory so badly that they are literally prepaying and locking in supplies years in advance. The bulls say Micron is no longer a boom and bust company. It is now a contracted, predictable, secular growth business. Guys, that's a completely different investment view than the past. Bullcase number three, for an AI stock, this thing is cheap. Now, this one will surprise a lot of people. Every after everything we just talked about, the record earnings, the $50 billion next quarter guidance, the 16 contracts, you might think the stock is wildly expensive. But the bulls point out that Micron is trading at roughly 9 to 14 times forward earnings. Let me put that into perspective. Nvidia as comparison trades at 19 to 22 times forward earnings while Broadcom trades at almost 32 times forward earnings. The bulls are saying Micron is essentially a discount ticket into the AI infrastructure trade. You are getting AI level growth at a value stock price. Bank of America has the highest price target in the street and they're saying this stock is still massively undervalued. That's the bull case. And guys, if they're right, it's an incredibly strong one. Now, before I get into the bare case, I want to share something quickly because this is exactly why having our software and being in our community matters. Back on December 27th, 2024, Dalton, one of our in-house analysts, made an exclusive video on Micron for our community. He looked at the numbers and he said, "There's a lot of value here." That was when the stock was under $90 per share. That was before the trillion dollar headlines. That was before UBS slapped a $1625 price target on it and before these insane earnings. And since Daltton made that call, the stock is up almost a thousand%. Now, we will never ever make stock suggestions or stock tips. But Dalton was in the community talking about this company. And he's been talking about Micron for a very long time with me personally saying there's pent-up demand here. That is the power of being in there with us. On our main YouTube channel and on our plus channel combined, we have analyzed around 50 stocks this month and we do it consistently. That's a lot. But inside the community, members have analyzed over 4400 stocks this year alone. That's the difference. That's what you get when you're in a room with us every single day. So, if you want to see what stocks Dalton and other community members are analyzing right now before they show up in the news, click the link in the description and check it out. Now, let's get into the bare case because just like Dalton spotted value right now, there are some serious warning signs hiding underneath this rally that almost nobody on Wall Street is talking about because there's a lot of excitement going on. Barecase number one, this industry has always crashed and it will again. Here is the pattern that's played out in memory chips over and over again throughout history. Prices spike. Companies make a ton of money. Everyone races to build more factories. More supply hits the market. Prices crash. Companies lose money. Rinse. Repeat. The bulls say AI broke that cycle. Their bear said no it did not. They say new factories are coming online in 2027. More supply will be coming. And when it does, Micron's pricing power evaporates. The margins shrink. The earnings fall and the stock will follow. The bears are not saying that AI is fake. They're saying this industry has never escaped its own nature and there's no reason to believe this time is different. Bear case number two, the stock is priced for perfection and perfection is a dangerous place to live. Micron just put up 86% gross margins versus 39% last year. That's an extraordinary number. But here's the risk. When a stock is priced for everything to go right, any piece of bad news hits harder than normal. If margins slip, if one big customer pulls back, if consumer electronics demand softens and the NAND prices drop, the stock doesn't just dip. It can fall hard and fast. The bears point out that at these valuations, Micron has very little room for error. Everything has to keep going right quarter after quarter. And in this industry, that has never happened forever. Bare case number three. What if AI does not need this expensive memory forever? This is the sneaky bear case that does not get talked about enough. Right now, training the biggest AI models require enormous amounts of high bandwidth memory. That's what's driving Micron's numbers. But AI is also getting far more efficient. Researchers are figuring out how to run AI models on cheaper, simpler memory. That memory is called standard memory, which is the kind that costs a fraction of what HBM costs. If that trend continues, the big AI companies may not need as much premium HBM as everyone thinks. And if demand shifts to cheaper memory, Micron's pricing power and those 86% M margins, they go bye-bye. They're going to go along with that pricing decrease. The bears are not saying AI go away. They're saying that Micron might not be the one who benefits from it forever. We have heard both sides. Now, we can run the numbers, and that's exactly what we're going to do right now. All right, guys. So, currently Micron has a $1.2 trillion price tag. That is the price of the company, not the stock price. This is the true price because it factors in all the shares outstanding times the stock price. Next I go to is enterprise value. Guys are basically the same thing. What this tells me is Micron essentially has no debt. They can take their cash, pay off a lot of debt. This is a very good balance sheet. Next, free cash flow 31.6 6 billion in the last year, 6.4 in the last average for the last 5 years. Now, it's lower than its net income numbers. Something to consider here, but they're probably spending a lot on capital expenditures, building factories, building a lot of machinery in order to keep up with demand. Okay, couple other things. Look at this profit margin. 29.7% a year for the last 10 years. 31.7% a year for the last five. 56%. Bottom line margin over the last one year. Incredible. Look at the revenue growth rate. 21 a.5% for the last 10 years. 28% for the last five. 70% a year for the last three. Guys, absolutely incredible. Now, here's what confuses me. Very low returns on capital. What this means is they're not getting high returns in the money they've invest in the business. They got to put a lot of money in the business to make a lot, which is surprising considering how much their cash flow and net income have skyrocketed in the last few years. So, this is a little confusing. Maybe we have to wait some time to let it play out. But so far, some good things, some bad things. Nothing to write home about where I go, "Oh my god, stop this." Except for the returns on capital. That does concern me a little bit. Next, let's go to the eight pillars, guys. Four checks and 4x's. low debt, revenue growth, net income growth, and cash flow growth are obvious. Now, the five-year PE and five-year price of free cash flow. The reason I'm ignoring these is how much they've grown. I'm not my biggest concern on Micron is what one of the bulls say is one of the bears say is like, well, what if this doesn't continue? What if this is just if all of a sudden we don't need this high HBM memory? What if we just need normal memory going forward or things become more efficient? Are they likely to make this kind of money while the demand softens? That's a very good question in my opinion. I don't think that's an unreasonable question. And then low returns on capital and shares outstanding are up slightly. Not a big deal. So guys, remember we're not ever making a buy or sell decision on the eight pillars. We're using it to tell a story. Now, I've thrown a lot of numbers at you. If you're new to investing or new to the channel, I am sure this feels overwhelming and you are not alone. My goal in creating this channel was to simplify all this for you. The first step is I have a free gift for you guys. We have a key metrics PDF that will give you the explanation to all these metrics, what they are, how they're calculated. I want us speaking the same language. I want to make sure that when you watch this video or do your own research on stocks that you can sit there and get answers to the questions you have based on these numbers. So, if you want that absolutely free, click the link below and in a matter of seconds, you'll be able to download that keymetrics PDF absolutely free. And guys, real quick before we go further, don't take the title and thumbnail too literally. We're never here to give you a stock tip. We're here to teach you the process so that one day you can sleep better at night because you know how to value a stock, make good assumptions about this future, and understand the price you're paying. If you don't know why you're paying a price, if it falls 50%, you're not going to know why you should keep it or why you should move on from it. So, in a couple minutes, guys, we're going to find out the price that I'm willing to pay for the stock. Before we go, let's look at analyst estimates here because this is kind of interesting here. These are what the analysts are. Now, it might not have been updated on these analysts, but $60 per share this year falling to 30 in the next four years. Again, I'm sure analysts have to update their their numbers here. And that's why our software is so great about updating its numbers because look at revenue essentially flat in the next four years. So, what's interesting to me is they estimate revenue to be flat but yet earnings per share to drop. Why? Gross margin. If they think the gross margin can't hold up, what do you think is going to happen? But keep in mind, guys, 48 analysts are analyzing this year versus four four years from now. So, there's going to be a lot more updates as time goes on to the analyst estimations. So, now guys, is the fun part where we sit there and go to our stock analyzer tool, make assumptions about the future, and determine what the right price to pay is. Now, guys, for this company, I'm going to make what I consider to be very optimistic assumptions, not necessarily the assumptions. So, guys, I want you to stick with us because I'm going to do two different stock analyzers. One based on the bull case and one based on the bare case. So, first, let's do the bullcase. I did a 10-year analysis. I did 20, 25, and 30% revenue growth a year for the next 10 years. For the margin, I'm actually going to go a little bit higher here. I'm actually going to change this. 35, 45, 55%. Next, what PE would I apply to this company 10 years from now? Well, the bulls think it's awesome. I'm going to go 20, 23, and 26. And finally, a 9% no margin of safety market return. I'm trying to find what's the company worth, not the price I want to pay for it, what it's worth in the market. Because remember, you shouldn't pay what the company is worth. Because if you're just looking for 9 or 10%, buy a lowcost ETF. But that desired return is very personal. What do you want to do? So I hit the analyze button. The stock's currently at,044. This is why it's amazing on the bull case. Look at this. Low price of $1,850, high price of 7,600, middle price of 3,900. Even at these huge levels, 16, 26, and 35% 10-year return based on the cash flow. Don't fall the stock here, though, guys. Let's analyze the bare case. So, I'm going to go 7, 12, and 17%. For profit margin, I'm going to do 20, 25, and 30% back to their normal levels. PE, I'm going to go 15, 18, and 21 because it's still a high quality business. that the returns on capital in the last 10 years were pretty decent. They've declined. And then again, my 9% return. I hit the analyze button. And remember guys, this is still assuming at 7% you're doubling your revenue in 10 years. At 12% you're doubling every six years. So it's still a lot of growth for the company. This is not a true bare case. I hit the analyze button. I have a low price of 320, high price of 1300, middle price of 670. Do you see how much that changes the story? Buffett talks about this. He says, "If I can't reasonably determine what a company's going to make in 10 years, I don't buy it." So Buffett would pass on this, guys. That's why I personally am passing. I don't know which case is more likely than not, and I don't want to sit there hoping and praying that I'm right. That's the problem here. So, I'll just wait till cooler times happen. Guys, there's no doubt in my mind that Micron is an incredible business from a quality standpoint. But at the end of the day, the best company in the world, you can overpay for it and that would make it a bad investment. That's the fifth tenant of our principal driven investing. A great story becomes a bad investment if you pay the wrong price. Now, there's one more stock you need to see. It's one that I think could be a bigger opportunity in the market right now. Click this video right here to watch it. Thank you for your time.