Why the Sellers Are Wrong About Micron Technology Stock (MU)
The all-encompassing tech selloff that pushed the Nasdaq index 5% lower last week has done even worse with Micron Technology (MU). The stock took an 8% plunge last week and now stands 44% lower from its 52-week high. Despite the company performing well in recent quarters and posting solid numbers, MU stock is falling and remains volatile. Given the strong fundamentals juxtaposed against a broody macroeconomic background, I believe market participants are mistaken about Micron.
Given the recent sell-off in tandem with chip stocks still being highly sought after, MU stock is perfectly positioned for bulls to buy the dip.
Micron (MU) price history over the past 5 days
Micron is a leader in memory chips that are used in everything from smartphones and computers to large-scale data centers. The company specializes in DRAM, NAND, and HBM chips, all of which enable memory management in computing. These chips are essential for applications in AI and high-performance computing. Micron is already making HBM chips for Nvidia (NVDA), and I wouldn’t be surprised if it wins other AI chipmakers as customers in the upcoming years.
Likewise, I am bullish on Micron stock because of its industry leadership in memory products and growing market share in HBM chips.
Micron posted another solid beat on March 20 and reported earnings of $1.56 per share on sales of $8.05 billion for the fiscal second quarter of 2025. However, the stock has been tanking because of some weak guidance issued by management related to gross margins for the next quarter. Management projected gross margins of 36.5% due to “NAND underutilization.” This means that the company is facing margin pressure because of a supply and demand imbalance in NAND chips, leading to an oversupply and underutilization.
Micron (MU) estimated and reported earnings history
However, the company also hinted at margins improving sequentially in the fiscal fourth quarter of 2025 as it potentially raises prices during the second quarter of calendar 2025 and simultaneously manages the NAND supply. For those who aren’t aware, Micron’s consumer-oriented business has struggled due to a delayed upgrade cycle. The recovery is underway but isn’t complete. As it recovers and consumers upgrade their cars, phones, and PCs to newer models with AI functionality, we might see improvements in the supply and demand imbalance.
Several market analysts are projecting a looming recession, which would likely slow sales of electronics products. MU stock sellers shouldn’t discount the fact that Micron is making significant progress in the HBM or high bandwidth memory market. These chips are highly specialized and currently supplied by Micron and South Korea’s Samsung (SSNLF) and SK Hynix.
Both Korean manufacturers currently command a higher market share than Micron, and it’s expected to stay that way for the foreseeable future. According to an analysis from Bloomberg Intelligence, the HBM market is expected to grow from $4 billion in 2023 to $130 billion in 2033. According to analysts, Micron is expected to account for about $30 billion of the HBM market in about eight years. Micron’s Compute and Networking Business Unit, or CNBU, comprises the HBM chips it sells and some other products, including DDR, LPDRAM, and GDDR chips.
Micron (MU) revenue, earnings and profit margin history
The CNBU unit logged a revenue of ~$9.5 billion in fiscal 2024, up 67% year-over-year, and accounted for 38% of total revenue. That’s not even a third of the expected market share, and stripping out the other products within the segment, focusing solely on HBM chips, it’s clear there are untapped opportunities for Micron.
The company is making HBM chips for Nvidia. Chief Executive Sanjay Mehrotra confirmed during the recent earnings call that the company is shipping HBM chips to a “third large customer.” The company is also growing its HBM capacity, and rightfully so. In January 2025, Micron began constructing a new HBM packaging facility in Singapore, where operations are expected to commence in 2026. The company’s HBM capacity for calendar 2025 is already sold, and that’s a classic case of demand exceeding supply.
Moreover, the company’s chips are superior to competitors’ offerings in terms of technology. Its HBM3E chip is 30% more power efficient than similar products in the market, and those are the chips used in Nvidia’s GB200 and GB300 systems. The company’s upcoming HBM4 technology provides a bandwidth increase of 60% compared to its predecessor, HBM3E, and it’s seeing strong demand for these products into 2026. Therefore, these chips will likely sell out in advance, as the previous generation did.
At 8x its fiscal 2026 EPS estimate, this is the cheapest MU stock in the past five years. For added momentum, MU now has an expanding HBM market share and growing AI demand. The sellers are overlooking the long-term enterprise opportunity.
Micron (MU) vs. S&P 500 (SPY)
However, as enticing as it may be, I wouldn’t go all-in on MU stock just now because of recession risks. A recession might put pressure on the consumer side of the business and lead to sluggish sales revenues in the near term.
On Wall Street, MU stock carries a Strong Buy consensus rating based on 21 Buy, three Hold, and zero Sell ratings over the past three months. MU’s average price target of $129.65 per share implies more than 46% upside potential over the next twelve months.
On March 26, Aaron Rakers from Wells Fargo reiterated his Buy recommendation on MU stock and reaffirmed his bullish price target of $130. Rakers noted that Micron’s strategic initiatives to reduce NAND wafers have started to manage the supply-demand imbalance and see improvements in its financial metrics due to projected growth in chip shipments.
The dip in MU stock has created an attractive entry point for long-term investors who can look beyond the near term. While the weak margin guide for the upcoming quarter and the company’s challenges in its consumer-oriented markets have taken over investor sentiment right now, I see the trend reversing as the HBM business gains more traction. Micron’s progress in HBM should not be overlooked by investors; there’s a lot of untapped potential yet to be realized.
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