Micron Technology (MU) has experienced a significant decline in April, with its stock dropping 20% amid concerns related to the ongoing tariff situation. Reports indicate that Micron might consider increasing the prices of its memory products due to its global manufacturing footprint, which includes facilities in the U.S., Japan, Taiwan, and China. However, semiconductors have been spared from tariffs by both the U.S. and China so far. Furthermore, the Trump administration has temporarily delayed imposing reciprocal tariffs on most trade partners and has exempted imports of memory chips and hard drives from China.
Consequently, Micron may not need to raise product prices, a step that could affect demand as customers would have to manage higher costs. Despite the tariff concerns, Micron is witnessing robust demand for its memory products, presenting production challenges for the company. This is reflected in the company’s strong performance in the previous quarter and its optimistic outlook for the current period.
Investors might find Micron’s stock appealing after its recent decline. The company’s valuation appears attractive, given a 38% year-over-year increase in revenue during the last quarter and a 3.7 times increase in earnings. Trading at less than 17 times trailing earnings and a forward earnings multiple of 10, Micron is priced lower than the tech-heavy Nasdaq-100 index, which has a trailing price-to-earnings ratio of 27 and forward earnings multiple of 23.
Micron’s potential earnings growth also highlights its value. According to Yahoo! Finance, the company’s price/earnings-to-growth (PEG) ratio stands at 0.15, indicating the stock may be undervalued considering its five-year growth prospects, fueled by the deployment of AI infrastructure and AI-capable devices.
The growing demand for high-bandwidth memory (HBM) chips used in GPUs for AI workloads in data centers is benefiting Micron. The company’s data center revenue tripled year-over-year, with HBM generating $1 billion in quarterly revenue. Micron has exceeded expectations for HBM shipments and fully sold its HBM capacity for 2025. The company plans to expand HBM capacity to meet 2026 demands and has raised its total addressable market estimate for HBM to $35 billion for 2025. One third-party estimate projects the HBM market could reach $86 billion by 2030, providing substantial growth opportunities for Micron’s data center business.
Additionally, Micron’s memory products are increasingly used in AI-enabled smartphones and PCs, with rising memory content in these applications. DRAM content in AI-enabled PCs is up by a third compared to PCs from the previous year, and flagship AI smartphones are using 50% more DRAM compared to 2024 models. Shipments of AI-capable smartphones and PCs are expected to grow annually by nearly 35% through 2029, potentially supporting further growth in Micron’s memory shipments.
Overall, Micron Technology’s outlook appears strong, offering an attractive investment opportunity at its current valuation. The company’s potential to overcome its recent challenges and achieve significant growth in the long term may appeal to investors.
