Explosive growth versus lagging stock price: HBM demand drives Micron (MU.US)'s Q2 earnings surge, with analysts targeting $770.

Micron Technology (MU.US) will release its fiscal second-quarter earnings for 2026 after the U.S. stock market closes on Wednesday, March 18 (Eastern Time), which is the morning of March 19 in Beijing. Wall Street analysts generally expect that driven by sustained strong demand for high-bandwidth memory (HBM), Micron’s revenue this quarter could surpass $19.1 billion, with earnings per share (EPS) approaching $8.56. Ahead of this earnings report, Seeking Alpha analyst Dair Sansyzbayev reaffirmed a “Strong Buy” rating on the company.

The analyst noted that his previous bullish outlook for Micron at the end of 2025 has been well validated, as the stock has risen over 40% since then, despite the overall market retreating. Micron has been digesting various positive factors over the past few months, and another tailwind is on the horizon.

Sansyzbayev refers to the upcoming Q2 FY2026 earnings, which are very likely to show strong performance. Interestingly, despite the rapid strengthening of fundamentals, the stock’s price growth has lagged behind the upward revisions of EPS estimates. This indicates that Micron’s valuation multiples remain quite low, while market confidence in its robust growth potential is high, supported by various structural tailwinds.

Earnings Preview and Recent Developments

Micron is scheduled to release its earnings on March 18. Its previous earnings reports have exceeded market expectations for ten consecutive quarters. With such a strong track record of profitability, it’s no wonder that Wall Street analysts are optimistic about its prospects—over the past 90 days, EPS estimates for Micron have been raised 23 times with no downgrades.

The company has demonstrated unstoppable revenue growth, with year-over-year growth accelerating from 36.6% to 56.7% over the past three quarters. For Q2 FY2026, analysts forecast a significant jump in revenue growth, estimated at 137%. Moreover, net profit growth is expected to outpace revenue growth substantially, with adjusted EPS projected to soar by 452%. Notably, the forecasted EPS for Q2 FY2026 is $1.61, surpassing the full-year adjusted EPS of $1.29 for FY2025.

This isn’t just a short-term spike; projections suggest Micron will maintain an average year-over-year revenue growth rate exceeding 100% over the next four quarters. Meanwhile, analysts expect the average EPS growth rate over these four quarters to reach as high as 332%, several times higher than the projected revenue growth. Given Micron’s history of outstanding earnings surprises, it has the capacity to realize these aggressive forecasts.

Behind these impressive figures lies a story of strong growth supported by large-scale structural tailwinds.

In 2026, the global AI boom is accelerating, with tech giants investing hundreds of billions in data centers and governments increasing their national AI budgets. Micron is one of the few major suppliers of high-performance memory chips for data centers. Its competitors in this field include Samsung Electronics and SK Hynix, both strong Asian players. When market expansion is slow, competition poses a fundamental risk; however, in an era of rapid AI adoption, the situation is different.

In Sansyzbayev’s view, this trend is clear: memory prices continue to rise, and market demand far exceeds total supply. This indicates that the potential market is expanding at an astonishing rate, effectively dispersing competitive risks. As AI’s accelerated adoption becomes a long-term trend rather than a cyclical bull market, the analyst believes that the competitive risk will remain relatively low in the coming years.

However, Micron’s management and engineering teams are not resting on their laurels. They are actively working to build a wide economic moat, which is crucial because a broad moat provides resilience, enabling the company to withstand demand shocks. Currently, Micron’s EPS is growing rapidly, and R&D investments are also increasing steadily. Thanks to a relentless focus on innovation, Micron’s pace of launching cutting-edge new products remains impressive. Recently, the company began sampling the industry’s highest-capacity LPDRAM module—256GB SOCAMM2—again demonstrating its technological strength.

It’s worth noting that Micron not only relies on its own expertise but also actively collaborates with industry leaders to enhance product competitiveness. Currently, Micron is working closely with Applied Materials (AMAT.US) to develop and manufacture DRAM, HBM, and NAND solutions for AI systems. This is not their first collaboration; the two companies have established a strong and lasting technical partnership. Partnering with an innovative company like Applied Materials is another fundamental advantage for Micron. Applied Materials has extensive, proven R&D experience, investing billions annually, and is recognized as a key supplier in the supply chains of industry giants like Intel (INTC.US) and TSMC (TSM.US).

Valuation Update

Micron’s most notable advantage is that its earnings growth and upward EPS revisions far outpace its stock price appreciation. Over the past 12 months, the stock has surged an astonishing 323%, yet its valuation multiples remain relatively modest. Specifically, its forward non-GAAP P/E ratio is slightly below 12, compared to the industry average of nearly 22. From the earnings preview, it’s clear that EPS in the coming quarters is expected to rise sharply, making its PEG ratio remarkably low—only 0.2—about one-sixth of the industry average.

Although AMD (AMD.US) is not a direct competitor, Sansyzbayev believes comparing valuation ratios between the two is meaningful. Both are highly profitable semiconductor companies with similar market caps and are popular AI investment targets, both currently rated as “Strong Buy” by SA Quant.

Comparing Micron’s valuation multiples to AMD reveals how undervalued Micron is. AMD’s expected P/E ratio over the next year is nearly three times that of Micron, but AMD’s valuation is not necessarily overvalued, as its P/E is expected to compress significantly. Typically, such a large valuation gap only makes sense if the higher-valued company demonstrates stronger growth and profitability. However, as shown in the table below, Micron outperforms AMD in nearly all growth and profitability metrics.

Therefore, Sansyzbayev believes Micron’s stock is severely undervalued ahead of the FY2026 Q2 earnings release. Using Micron’s full-year EPS forecast of $35.38 and the industry median forward P/E of 21.76, the target price is approximately $770. This is well above the current share price, which is just over $400.

Risk Update

Despite the very bullish signals from valuation ratios, two factors suggest some risks. First, Wall Street analysts believe Micron’s upside may be limited, as their average target price is only slightly above the current price. Second, even with low valuation multiples and soaring EPS, insiders are actively selling shares. Theoretically, if Micron truly has such enormous upside potential, why would insiders be selling?

Market reactions after earnings are hard to predict precisely, as they can be heavily influenced by geopolitical events and macro news on the day of release. While Micron is likely to report strong Q2 FY2026 results and provide optimistic guidance, this does not guarantee its stock will soar afterward. News such as escalating tensions with Iran or sharp energy price increases could trigger panic selling across markets, potentially dragging Micron’s stock down.

Finally, it’s worth noting that Micron’s stock has already risen over 300% in the past year. In the current macro environment filled with high uncertainty, some investors may prefer to lock in profits after the earnings release.

Conclusion

In summary, Sansyzbayev remains confident that Micron Technology is a “Strong Buy” before its upcoming earnings report. Of course, buying stocks before earnings always carries risks—despite the company’s strong revenue and profit surprises and optimistic guidance, market reactions can be unpredictable.