Micron Technology ranks as one of the cheapest stocks in the S&P 500 by valuation, trading at the third-lowest multiple in the index even after leading much of the market’s artificial-intelligence rally. The gap reflects lingering doubts about a company whose business has shifted.
The memory chipmaker has long been treated by investors as a classic cyclical, its earnings swinging with the boom-and-bust rhythm of DRAM and NAND pricing. That reputation has kept its valuation depressed relative to other beneficiaries of the AI buildout, even as demand for high-bandwidth memory has climbed.
High-bandwidth memory, or HBM, is the specialized chip that sits alongside AI accelerators to feed data to processors at speed. Micron is one of three major suppliers of the product, competing with SK Hynix and Samsung Electronics. The segment carries far steadier pricing than the commodity memory that historically defined the industry.
Analysts argue the market has not fully priced in that change. A large share of Micron’s HBM output is now sold under long-term contracts rather than at spot rates, which reduces exposure to the sharp price collapses that once wiped out profits during downturns.
That contract structure, one argument holds, sets a floor under the company’s worst-case scenario. The downside is written into supply agreements, not left to fluctuating memory prices, giving earnings a stability the stock’s low multiple does not reflect.
The debate arrives after a volatile stretch for memory names. Micron shares have swung on sector sentiment, competitor results and warnings about supply, at one point climbing past $1,000 following a memory-shortage warning tied to surging AI demand.
Skeptics counter that memory remains cyclical at its core, and that any slowdown in AI capital spending would still pressure both volumes and margins. The commodity portion of Micron’s business continues to move with global supply and demand.
For now, the valuation gap persists. Whether it closes depends on whether investors come to view Micron’s contracted HBM revenue as a durable base rather than another peak in a familiar cycle.