Earnings Preview | Explosive Growth VS Lagging Stock Price: HBM Demand Propels Micron (MU.US) Q2 Profit Surge, Analysts See $770

Micro Technology (MU.US) will release its Q2 FY2026 earnings after the U.S. stock market closes on March 18 (Wednesday), Eastern Time (early morning March 19 Beijing time). Wall Street analysts generally expect that driven by sustained strong demand for high-bandwidth memory (HBM), Micro’s revenue this quarter could surpass $19.1 billion, with EPS approaching $8.56. Before 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 Micro by the end of 2025 has been well validated, as the stock has risen over 40% since then, despite the overall market retreating. Micro has been digesting various positive factors from 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. Remarkably, despite the fundamentals rapidly strengthening, the stock’s price growth has lagged behind upward revisions of EPS estimates. This indicates that Micro’s valuation multiples remain quite low, while market confidence in its strong growth potential is high, supported by various structural tailwinds.

Earnings Preview and Recent Developments

It is understood that Micro will release its earnings on March 18. The company has now 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—over the past 90 days, EPS estimates for Micro have been raised 23 times, with no downgrades.

The company shows unstoppable revenue growth, with year-over-year growth accelerating from 36.6% to 56.7% over the past three quarters. For Q2 FY2026, analysts predict revenue growth will surge by as much as 137%. Moreover, net profit growth is expected to outpace revenue significantly, with adjusted EPS projected to soar by 452%. Even more astonishing, the forecast EPS for Q2 FY2026 is $1.61, surpassing the full-year adjusted EPS of $1.29 for FY2025.

This is not just a short-term peak; forecasts suggest that Micro will maintain an average year-over-year revenue growth rate of over 100% across the next four quarters. Meanwhile, analysts expect the average EPS growth rate over these four quarters to reach 332%, several times higher than the projected revenue growth. Given Micro’s past outstanding earnings surprises, it has the capacity to realize these aggressive forecasts.

Behind these impressive figures lies a story of robust 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 sovereign AI budgets. Micro is one of the few major suppliers of high-performance memory chips for data centers. The field also includes strong Asian competitors like Samsung Electronics and SK Hynix. When market expansion is slow, competition is a fundamental risk; however, in the era of rapid AI adoption, the situation is different.

In Sansyzbayev’s view, this phenomenon 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 acceleration becomes a tangible long-term trend rather than just a cyclical bull market, the analyst believes that competitive risks may remain low over the next few years.

However, Micro’s management and engineering teams are not complacent with the current favorable conditions but are actively working to build a wide moat. This is crucial because a broad moat provides resilience, enabling the company to withstand demand downturns. Currently, Micro’s EPS is growing rapidly, and R&D investments are also increasing steadily. Thanks to a relentless pursuit of innovation, the company continues to launch cutting-edge new products. Recently, it began sampling the industry’s highest-capacity LPDRAM module—256GB SOCAMM2—once again demonstrating its technological strength.

It’s worth noting that Micro not only relies on its technical expertise but also actively collaborates with other industry leaders to enhance product competitiveness. Currently, Micro 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. Having a partner like Applied Materials, known for innovation, is another fundamental advantage for Micro. Applied Materials has extensive proven experience, invests billions annually in R&D, and is a key supplier in the supply chains of industry giants like Intel (INTC.US) and TSMC (TSM.US).

Micro’s most notable advantage is that its profit 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 ratios remain relatively moderate. Specifically, its forward non-GAAP P/E ratio is slightly below 12, compared to the industry average of nearly 22. From the earnings outlook, it’s clear that EPS in the coming quarters will rise sharply, making its PEG ratio only 0.2—six times lower than the industry average.

Although AMD (AMD.US) is not a direct competitor, Sansyzbayev believes comparing valuation ratios is still meaningful. Both are highly profitable semiconductor companies with similar market caps. Both are also hot picks in AI investments and currently hold a “Strong Buy” rating from SA Quant.

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

Therefore, Sansyzbayev believes that before the release of Micro’s FY2026 Q2 earnings, the stock is severely undervalued. Based on a full-year EPS estimate of $35.38 and a median industry 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.

Despite the bullish signals from valuation ratios, two factors suggest some risks. First, Wall Street analysts believe the upside potential for Micro’s stock 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 Micro truly has such enormous upside potential, why would insiders be selling?

Market reactions after earnings are hard to predict precisely, as they are highly sensitive to geopolitical and macroeconomic news on the release day. While Micro is very likely to report strong Q2 FY2026 earnings and provide optimistic guidance, this does not guarantee the stock will soar afterward. News such as escalating tensions with Iran or sharp rises in energy prices could trigger panic selling across the market, potentially dragging Micro’s stock down.

Finally, it’s worth noting that Micro’s stock has already risen over 300% in the past year. In today’s highly uncertain macro environment, some investors may prefer to lock in profits after the earnings release.

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