Micron Just Guided to $50 Billion in Q4 Revenue — Is This the Most Undervalued Stock in the S&P 500 Right Now?

On June 24, 2026, Micron Technology reported fiscal third-quarter results that even seasoned semiconductor analysts struggled to find adequate words for. Revenue came in at $41.46 billion, smashing the company's own already-aggressive guidance of $33.5 billion. GAAP net income reached $28.24 billion, or $24.67 per diluted share. And buried inside the earnings release was the number that has triggered the most excitement on Wall Street: guidance for the fiscal fourth quarter calling for revenue of $50 billion, plus or minus $1 billion, at a gross margin of approximately 86 percent. For a company that generated $9.3 billion in revenue during the same quarter just one year earlier, that represents growth of more than 400 percent in a single year. And yet, even after a year-to-date stock gain of roughly 293 percent, Micron shares continue trading at a forward earnings multiple that many analysts consider startlingly low relative to the growth on display. That gap between extraordinary fundamentals and a valuation that still looks restrained by historical technology-stock standards is exactly what makes Micron one of the more genuinely debated stocks in the entire S&P 500 right now.

The Numbers Behind the Guidance

To understand why Micron's $50 billion guidance landed with such force, it helps to see the trajectory that preceded it. Revenue climbed from $13.64 billion in fiscal Q1, to $23.86 billion in fiscal Q2, to $41.46 billion in fiscal Q3, an acceleration that reflects not gradual market share gains but a fundamental repricing of memory chips driven by supply scarcity. Gross margin climbed alongside revenue, reaching 84.6 percent on a GAAP basis in the third quarter, with management now guiding to roughly 86 percent for the fourth quarter. Operating cash flow reached $25.39 billion for the quarter alone, and the company ended the period holding $30.2 billion in cash, marketable investments and restricted cash.

Behind these figures sits a structural story that Micron's own leadership has described in unusually blunt terms. Chief executive Sanjay Mehrotra has stated that the company's entire calendar 2026 supply of high-bandwidth memory, the specialized chips that sit directly on AI accelerators from Nvidia, AMD and Google, is sold out under fixed-price, multi-year contracts. Key customers are currently receiving only 50 to 67 percent of the volume they actually want, an imbalance that several analysts covering the stock have said shows no clear line of sight toward resolution before 2028 at the earliest, since new manufacturing capacity at sites in Idaho, Singapore and elsewhere will not meaningfully contribute additional output until 2027 and 2028.

A Forward Multiple That Looks Out of Step With the Growth

Despite a stock price that has roughly quadrupled this year, Micron continues trading at a forward price-to-earnings multiple in the high teens, a figure that several analysts have pointed out sits at a steep discount to the broader semiconductor industry average, which has at various points this year exceeded 40 times forward earnings. Bank of America has set a price target of $1,500 on the stock, implying analysts at one of Wall Street's largest firms believe meaningful further upside remains even after this year's extraordinary run. Multiple other firms have issued comparably aggressive targets in recent weeks, including UBS at $1,625 and Needham at $1,550, with several of these revisions representing price target increases exceeding 200 percent in a matter of weeks.

The argument behind a 17-times multiple looking cheap rests on a specific claim: that Micron's earnings power is no longer best understood through the lens of a traditional, cyclical memory chip company, where investors have historically applied low multiples precisely because today's elevated profits were expected to evaporate once the next industry downturn arrived. If HBM demand and pricing power prove durable rather than temporary, as Micron's sold-out, multi-year contract structure suggests, then a forward multiple built on the assumption of an imminent reversal in earnings would represent a significant mispricing relative to what the company is actually likely to earn over the next several years.

The HBM Market Opportunity Driving the Bull Case

The scale of the broader market opportunity underlying this thesis is genuinely enormous. Mehrotra has projected that the global HBM market will expand from $35 billion in 2025 to approximately $100 billion by 2028, a compound annual growth rate of roughly 40 percent, driven by the simple fact that every new generation of AI accelerator requires substantially more memory bandwidth than the one before it. Micron has grown its share of this market from roughly 9 percent to 21 percent in the span of about a year, and the company has been certified by Nvidia, alongside Samsung and SK Hynix, to supply HBM4 for its next-generation Vera Rubin AI platform, with Micron's yield ramp on the new product reportedly running ahead of its previous HBM3E generation.

There is a secondary effect compounding this opportunity that deserves attention as well. Manufacturing HBM chips is significantly more silicon-intensive than manufacturing conventional DRAM, with a single HBM wafer consuming roughly three times the production capacity of a standard DDR memory wafer, a ratio that increases further with the transition to HBM4. Every wafer that Micron and its competitors redirect toward HBM production simultaneously tightens the available supply of conventional memory used in personal computers and smartphones, which has contributed to DRAM prices rising in the range of 58 to 65 percent and NAND flash prices climbing 70 to 75 percent in recent months. This means Micron's pricing power is not confined narrowly to the AI-specific portion of its business, but is instead lifting margins and revenue across the company's entire product portfolio simultaneously.

What 17 Times Earnings Actually Means in Historical Context

It is worth pausing on what a 17-times forward earnings multiple has historically signaled in the semiconductor industry, because the context matters enormously for judging whether today's valuation is genuinely cheap or simply reflects appropriate caution about an inherently cyclical business. Memory chip companies have, for decades, traded at depressed multiples during periods of strong earnings precisely because markets have learned, repeatedly and painfully, that elevated memory pricing tends to invite a flood of new capacity investment from Micron, SK Hynix and Samsung simultaneously, which eventually overwhelms demand and collapses prices, sometimes within a year or two of the previous peak.

That history is exactly why some analysts remain skeptical that today's valuation represents a clear-cut bargain rather than an appropriately cautious price for an inherently boom-and-bust industry. The bullish counterargument is that this cycle differs meaningfully from previous ones because HBM has transformed Micron from a generic commodity supplier into a member of a tightly concentrated, three-company oligopoly serving a customer base, primarily Nvidia, AMD and major cloud providers, that is contractually locked into multi-year supply agreements rather than negotiating prices quarter by quarter as in the past. Whether that structural shift is durable enough to justify treating Micron's current earnings as a reliable baseline rather than a cyclical peak is, ultimately, the central question any investor evaluating this stock needs to answer for themselves, since reasonable, well-informed analysts currently disagree.

The Bull Case for MU Heading Into Q4

The bull case for Micron rests on several pillars that are, by this point, well documented and difficult to dismiss entirely. The company's HBM supply is genuinely sold out through the remainder of 2026 under contracts that lock in pricing rather than leaving it exposed to spot market volatility, providing a level of revenue visibility that memory chip investors have rarely enjoyed in the industry's history. The total addressable market for HBM specifically is projected to nearly triple by 2028, and Micron has demonstrated it can capture an increasing share of that growth, validated directly by Nvidia's decision to certify the company as a supplier for its next-generation AI platform. Management's own guidance, calling for $50 billion in quarterly revenue and 86 percent gross margins, reflects confidence that current pricing strength will persist at least through the next quarter, and new manufacturing capacity will not meaningfully expand industry-wide supply until 2027 and 2028 at the earliest, suggesting today's favorable pricing dynamics have real staying power in the near term regardless of how the longer-term cycle eventually plays out.

The Bear Case for MU Heading Into Q4

The bear case, while less fashionable amid the current enthusiasm, is built on the oldest and most reliable pattern in semiconductor history: extraordinary pricing power driven by genuine scarcity has, in every previous memory cycle, eventually invited enough new capacity investment from Micron and its competitors to erode that same pricing power, often more quickly and more severely than anticipated. Micron itself is spending aggressively to capture today's opportunity, with capital expenditure for fiscal 2026 expected to exceed $25 billion and management indicating spending will step up meaningfully again in fiscal 2027, investment that, while necessary to meet current demand, is also precisely the kind of capacity expansion that has historically planted the seeds of the next downturn. The stock's valuation, even at a forward multiple that looks modest relative to other AI-exposed technology stocks, has already priced in a substantial amount of continued strength, and free cash flow is being consumed almost entirely by this capital spending program, leaving relatively little room for the company to disappoint on execution without triggering a meaningful reassessment of how durable today's earnings power actually is. Additionally, the stock's massive year-to-date gain means that even a strong quarter that merely meets, rather than significantly exceeds, already-elevated expectations could trigger a sharp pullback, a dynamic that has played out twice already this year, with Micron experiencing two separate declines of roughly 20 percent despite its overall powerful uptrend.

A Rational Framework for Evaluating the Valuation Question

Whether Micron genuinely qualifies as the most undervalued stock in the S&P 500 depends almost entirely on which of the two narratives described above an investor finds more persuasive, and reasonable people can examine the same set of facts and reach different conclusions. Investors who believe the HBM-driven transformation of Micron's business model is structural and durable, supported by multi-year contracts, a concentrated three-company supply oligopoly and an HBM market projected to nearly triple by 2028, have a coherent basis for viewing a 17-times forward multiple as a genuine mispricing relative to a company whose earnings power has fundamentally and permanently improved. Investors who remain mindful of the memory industry's long, well-documented history of boom-and-bust cycles, and who note that Micron and its competitors are currently investing tens of billions of dollars in new capacity that will eventually come online, have an equally coherent basis for treating today's extraordinary margins as closer to a cyclical peak than a new permanent baseline, regardless of how favorable the multiple appears in isolation.

The Bottom Line

Micron's guidance for $50 billion in fourth-quarter revenue at 86 percent gross margins is an extraordinary result by any historical standard, and it arrives backed by genuinely structural demand dynamics, including sold-out HBM supply locked into multi-year contracts and a market opportunity that the company's own leadership expects to nearly triple within two years. Whether that combination makes Micron the most undervalued stock in the S&P 500 or simply a richly performing stock that has not yet been bid up to match its other AI-exposed semiconductor peers is a judgment call that depends heavily on how much weight an investor places on this industry's long history of pricing power eventually eroding once new capacity comes online. What seems clear, regardless of where any individual investor lands on that question, is that Micron's results this week have decisively shifted the burden of proof onto the skeptics, who must now explain why a company with sold-out supply, multi-year contracted revenue and a 40 percent compound annual growth market opportunity should continue trading at a discount to the broader technology sector, rather than the other way around.

*This article is for informational purposes only and does not constitute financial or investment advice. Always conduct your own research or consult a licensed financial advisor before making investment decisions. Data referenced is sourced from Micron Technology's SEC filings and press releases, Investing.com, TipRanks, StockTitan, TradingView, and Money Morning as of June 24, 2026.*