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Mizuho analyst Vijay Rakesh just raised his price target on Micron.
Micron generates a lot less cash than its earnings suggest.
Micron (Nasdaq: MU) stock resumed marching higher Friday, gaining 4.1% through 1:25 p.m. ET after Mizuho analyst Vijay Rakesh issued a 2026 outlook for semiconductor stocks and raised his price target on Micron to $390 per share.
Image source: Getty Images.
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Rakesh cites "attractive valuations" as propitious for semi stocks to continue gaining in 2026, although the analyst doesn't expect gains as large as the sector enjoyed in 2025.
AI accelerators, wafer fab equipment, optical, and memory are three subsets of semiconductors Mizuho is most keen to own. Mizuho is less sanguine about the prospects for electric vehicles in particular, semiconductors for automobiles in general, or computers and handsets.
Micron reported a 56% increase in sales in its most recent quarter, while earnings per share nearly tripled year over year. In the current quarter, Micron CEO Sanjay Mehrotra forecasts the company will book $18.7 billion in revenue and earn approximately $8.19.
Analysts who follow the stock think this year could see Micron earn as much as $32.30 total -- and then grow another 23% in 2027.
Assuming they're right, that's a 10.5 current-year P/E ratio on a stock growing at 23%, which seems a pretty amazing valuation on Micron stock (and not coincidentally, a good reason for Mizuho to think the stock will "outperform" this year).
If there's one caveat I'd make, it would be to point out that Micron's trailing free cash flow is only $4.7 billion -- much less than the $11.9 billion Micron reports for TTM "earnings." Valued on FCF, the stock sells for a multiple of 78x, which is much more expensive than the P/E.
If you're looking for a bear case on Micron stock, I'd start there.
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