Micron Stock Soars 23% in a Month: Time to Hold or Book Profits?

Micron Technology, Inc. MU has seen its share price soar 22.7% over the past month. This surge has significantly outperformed the broader Zacks Computer and Technology sector, which gained 10.7% during the same period.

This outperformance raises the question: Should investors book profits and exit or continue holding the stock?

Trade Truce Sparks Rally in Micron Shares

Micron’s latest rally was fueled by optimism around improving U.S.-China trade relations. Since late April, investor sentiment has been lifted by reports of a temporary easing of tariffs between the world’s two largest economies.

Under the new deal, the United States agreed to lower tariffs on Chinese imports from 145% to 30%, while China will reduce duties on U.S. imports from 125% to 10%. These revised rates will remain in effect for 90 days, creating short-term certainty for global commerce.

The temporary trade truce revived hopes for smoother international trade and strengthened confidence in the economic outlook. As fears of escalating trade disruptions faded, equities, particularly in the tech and semiconductor sectors, rallied sharply.

Apart from Micron, this broader market optimism also boosted share prices of other semiconductor players, including NVIDIA NVDA, Broadcom AVGO and Advanced Micro Devices AMD. Over the past month, shares of NVIDIA, Broadcom and Advanced Micro Devices have soared 25%, 22.5% and 17.8%, respectively.

Micron’s long-term growth potential, along with invigorated investor optimism, makes the stock worth holding at the moment.

AI and Data Centers Power Micron’s Growth Engine

Micron sits at the heart of several transformative tech trends. Its exposure to artificial intelligence (AI), high-performance data centers, autonomous vehicles and industrial IoT uniquely positions the company for sustainable long-term growth.

As AI adoption accelerates, the demand for advanced memory solutions like DRAM and NAND is soaring. Micron’s investments in next-gen DRAM and 3D NAND ensure it remains competitive in delivering the performance needed for modern computing.

The company’s diversification strategy is also bearing fruit. By shifting its focus away from the more volatile consumer electronics market and toward resilient verticals such as automotive and enterprise IT, Micron has created a more stable revenue base. This balance enhances its ability to weather cyclical downturns, a critical trait in the semiconductor space.

Micron is also riding a strong wave in high-bandwidth memory (HBM) demand. Its HBM3E products are attracting significant interest for their superior energy efficiency and bandwidth, ideal for AI workloads. In January 2025, NVIDIA confirmed that Micron is a core HBM supplier for its GeForce RTX 50 Blackwell GPUs, signaling deep integration in the AI supply chain.

Additionally, Micron’s newly announced HBM advanced packaging facility in Singapore, set to launch in 2026 with further expansion in 2027, underscores its commitment to scaling production for AI-driven markets.

Strong Forecasts Reinforce Micron’s Financial Strength

Micron’s financial outlook remains robust. The company’s third-quarter fiscal 2025 targets suggest robust year-over-year revenue growth of 29% and a 153% jump in EPS. The Zacks Consensus Estimate for fiscal 2025 and 2026 revenues indicates year-over-year growth of 41% and 30%, respectively. The consensus mark for EPS suggests a robust year-over-year improvement of 433% for fiscal 2025 and 56% for fiscal 2026.

Micron also has a strong history of beating earnings estimates. The stock surpassed the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average surprise being 10.7%.

MU Valuation Still Looks Compelling Despite Recent Surge

In terms of forward 12-month Price/Sales (P/S), MU shares are trading at 2.45X, significantly lower than the sector’s 6.07X.

The stock’s P/S ratio is also lower than major semiconductor players, including NVIDIA, Broadcom and Advanced Micro Devices. At present, Broadcom, NVIDIA and Advanced Micro Devices have forward 12-month P/S multiples of 15.59X, 15.96X and 5.31X, respectively.

Margin Pressures Cloud Micron’s Near-Term Outlook

While Micron impressed with 38.3% year-over-year revenue growth in the second quarter of fiscal 2025, its profitability came under significant pressure. The company’s non-GAAP gross margin declined to 37.9%, down from 39.5% in the previous quarter, marking a sharp sequential fall. This deterioration was driven by weaker NAND flash pricing and ongoing startup costs at its new DRAM production facility in Idaho.

More concerning is the company’s margin outlook. For the third quarter, Micron guided for a gross margin of 36.5% at the midpoint, signaling further compression. This weaker-than-expected outlook, despite record sales in its HBM segment, indicates that margin pressures are likely to persist.

Falling profitability, even amid strong AI-driven demand, raises questions about Micron’s ability to capitalize on the booming AI market. If the company cannot maintain healthy margins, future earnings growth could be constrained.

Final Thoughts: Hold MU Stock for Now

Micron’s fundamentals remain strong, and its position in the AI-driven memory market is well-established. The company offers compelling long-term growth potential, maintains a disciplined approach to innovation and trades at a discount relative to peers. However, ongoing margin compression warrants caution in the short term.

Given this balance of strengths and emerging risks, investors are advised to hold Micron stock for now. Currently, MU carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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