Trading at 7x Earnings in an AI Boom? This Is the 'Stupid Cheap' Stock Your Financial Advisor Won't Tell You About

Micron Technology is benefiting from AI-driven demand for DRAM and NAND used in data centers. Fiscal Q2 2026 revenue reached $23.9 billion, up 196% year over year, with non-GAAP EPS of $12.20 and gross margins of 75%. Q3 guidance calls for $33.5 billion in revenue, EPS of $19.15, and gross margin near 81%. The market valuation still resembles a commodity DRAM business, with a forward FY 2027 earnings multiple around 7x despite Micron supplying HBM for AI systems. Free cash flow reached $6.9 billion in Q2 FY2026, and the company holds $16.7 billion in cash with a net cash position of $6.5 billion. Management increased the quarterly dividend by 30%.

"Micron just reported fiscal Q2 2026 revenue of $23.9 billion, up 196% year-over-year, with non-GAAP EPS of $12.20 and gross margins of 75%. Guidance for Q3 calls for $33.5 billion in revenue, EPS of $19.15, and gross margin near 81%. Against a share price of $884 as of this writing, the market is still pricing this like a commodity DRAM shop heading into a downcycle. It is doing the opposite."

"NVIDIA trades north of 24x forward earnings for FY 2027 (ends in January 2027). Broadcom ( NASDAQ:AVGO) , almost the same. Micron, the company supplying the HBM that makes those GPUs functional, trades at a forward multiple of 7x. CEO Sanjay Mehrotra noted on the Q2 call that "AI demand is driving DRAM and NAND data center bits TAM to exceed 50% of the industry TAM for the first time in calendar 2026." The mix is shifting permanently, and the multiple has not caught up."

"Free cash flow hit $6.9 billion in Q2 FY2026, a quarterly record exceeding the prior Q1 record by 77%. The balance sheet carries $16.7 billion in cash and a net cash position of $6.5 billion. Management responded by approving a 30% increase in the quarterly dividend. The yield is small, but the direction and the coverage are what a long-duration holder wants to see."

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