Key Points
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Micron’s fiscal third-quarter revenue set a record at $41.5 billion, more than quadruple a year ago.
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The stock trades at under 7 times its expected earnings for the year ahead.
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Memory is deeply cyclical, and the recent pullback reflects fears the boom is peaking.
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Micron Technology (NASDAQ: MU) just delivered the biggest quarter in its history, as its critical positioning as a leader in a key input for the AI boom has led to soaring revenue and profits, with a memory shortage benefiting its business enormously. And yet the stock sits about 22% below the high near $1,255 it reached in June. Record results on one side of the ledger and a falling share price on the other — that is the disconnect worth digging into.
So, is the $1.1 trillion memory maker’s dip a chance to buy, or a warning that its best days this cycle are already behind it?
A record-shattering quarter
Micron’s fiscal third quarter of 2026 (the period ended May 28, 2026) was enormous by any measure. Revenue reached a record $41.5 billion, up from $9.3 billion a year earlier and $23.9 billion in the prior quarter. That is more than a quadrupling year over year, and a 74% jump in just three months.
And profits were just as striking. Non-GAAP (adjusted) earnings per share came in at $25.11, and gross margin hit a company record of about 85%. A year ago, Micron’s adjusted earnings were a small fraction of that figure, so this isn’t a business inching ahead. It is one sitting in the steepest part of an up cycle.
Driving it all is high-bandwidth memory (HBM), the fast, dense memory stacked alongside the processors inside artificial intelligence (AI) servers. Demand has far outpaced supply, and Micron is one of only three companies in the world that produce this memory at scale. Management guided to fiscal fourth-quarter revenue of about $50 billion and adjusted earnings per share of around $31 — about 20% higher revenue and 23% higher profit than the record quarter it just posted, pointing to an even bigger quarter directly ahead.
Why the stock fell
If the business is running this hot, why are the shares down?
Part of the answer is timing. On July 2, a sell-off swept through chip stocks after cautious commentary on AI demand rattled the group, and Micron slid more than 5% that day as its South Korean rivals fell even harder in Seoul. None of that reflected anything Micron itself reported. It was a change in sentiment, not in the numbers.
The deeper worry is the one that always shadows this industry: memory is cyclical. Prices and profits swing hard, and the same forces powering record margins today can reverse once supply catches up with demand. You only have to look at Micron’s own 52-week range — from about $103 to $1,255 — to see how violently this stock moves when sentiment shifts. Investors have watched Micron’s earnings collapse in past downturns, and no one wants to be the buyer at the top.
That fear is exactly what makes the valuation interesting. Today, Micron trades at about 22 times earnings — hardly a bargain on the surface. But measured against the earnings the company is on track to produce over the next year, the multiple drops to under 7. That is the kind of number that looks absurdly low until you remember it rests on peak-cycle profits that may not hold. If those earnings eventually fall by half, the multiple quietly doubles, and the “cheap” stock isn’t so cheap anymore.
So which read is right? Both contain some truth, and holding those two together is the whole investment case here. The bull case is that this cycle is different, powered by an AI build-out that has locked up memory supply years in advance rather than the usual boom-and-bust driven by personal computers and phones. The bear case is that cyclical is cyclical, and a stock priced for continued records has the most to lose when the cycle finally turns. History has sided with the skeptics often enough that the market refuses to award Micron anything close to a normal earnings multiple, which is precisely why that forward number looks so low.
So, is the dip a buy?
I think it is — but carefully. Micron’s fiscal third-quarter results were extraordinary, the AI memory shortage shows no sign of easing, and a single-digit forward valuation multiple leaves room for the stock to work even if growth cools from here. But because memory earnings can turn quickly, the key is to treat that cyclicality as the central risk, not an afterthought. In short, the stock may be a dip worth buying into as part of a small, measured position, as long as you respect how quickly this industry can turn.
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Daniel Sparks and his clients no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy.
