Shares of memory chipmaker Micron Technology fell sharply this week, dropping 17.46% to $656.39 on November 5 after touching an all-time closing high of $1,213.56 on June 25, according to Yahoo Finance. The steep single-session drop followed a broader slide in artificial intelligence data center stocks as investors questioned the sustainability of the current spending boom.
Valuation Divergence and Record Earnings Performance
The semiconductor sell-off created an unusual valuation spread. According to a chip-focused stock screen from Micron first, the company claimed the top spot with a forward price-to-earnings ratio of merely 3.72.
Full-year sales for fiscal 2026 surged 256% to $133.19 billion. Management projected current-quarter revenue of $61.5 billion, give or take $1.5 billion, with adjusted earnings of about $38.15 per share. Sanjay Mehrotra expressed strong optimism during an earnings call, stating that the company delivered record fiscal 2026 results and anticipated an even stronger fiscal 2027.
Micron delivered record fiscal 2026 results, and we expect an even stronger fiscal 2027.
Sanjay Mehrotra
Customer Commitments Secure Multiyear Revenue Growth
Surging demand for artificial intelligence servers collided with tight memory supply, driving up average selling prices. BigGo Finance noted in Micron’s annual report that fiscal 2026 brought roughly a 180% surge in DRAM average selling prices alongside a price increase of about 200% for NAND.
To manage future volume, the chipmaker signed 26 strategic customer agreements that cover more than 35% of revenue through 2030. These multiyear take-or-pay arrangements are backed by $32 billion in customer commitments, primarily consisting of deposits, leaving more than 75% of anticipated 2027 output committed.
We do not have a line of sight to when supply and demand will get in balance.
Sanjay Mehrotra
Rising Memory Costs Threaten Downstream Device Prices
Higher component costs have begun to squeeze downstream manufacturers. TrendForce warned that rising memory inflation might push a $900 laptop’s retail price up by more than 30% if device makers maintain their margins. Morningstar analyst William Kerwin noted that while the current environment represents a tremendous cycle, it remains a cyclical market and expects memory prices to peak around early 2028 before new factory capacity adds supply.
Mark Murphy discussed profit protection during the September 30 earnings call, noting that contracted pricing aims to safeguard margins even if market rates decline.
[E]ven at floor prices, we expect margins meaningfully above any prior cycle peak margins.
Mark Murphy
Investors will monitor Micron’s next financial results, scheduled for December 16, to evaluate whether pricing stability can maintain the company’s valuation against its quarterly targets.
