Micron Stock Rises 18% in Three Months: Will It Carry the Momentum?

Micron Technology, Inc. MU has delivered a solid 17.8% gain over the past three months. This performance easily beats the broader Zacks Computer and Technology sector, which rose 12% in the same period.

Micron stock has also moved ahead of several chip peers, including Marvell Technology, Inc. MRVL, QUALCOMM Incorporated QCOM and Intel Corporation INTC. While shares of Marvell Technology have risen 0.2% over the past three months, QUALCOMM and Intel have declined 2.4% and 13.8%, respectively.

This outperformance shows investors are increasingly confident in Micron’s long-term story, even during a volatile market shaped by trade conflicts and geopolitical risks. We believe this momentum is grounded in strong fundamentals, and MU’s long-term outlook justifies a hold position for now.

3-Month Price Return Performance

Evolving Tech Trends Fuel Multi-Year Growth for Micron

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. Micron has created a more stable revenue base by shifting its focus away from the more volatile consumer electronics market and toward resilient verticals such as automotive and enterprise IT. 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, its newly announced HBM advanced packaging facility in Singapore, set to launch in 2026 with further expansion in 2027, underscores the company’s commitment to scaling production for AI-driven markets.

The continuously evolving new tech trends and diversification strategy are likely to aid Micron’s growth over the long run. 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.

Undervaluation Supports a Hold Strategy for MU

Despite its strong growth, Micron stock still looks reasonably priced. It trades at a forward 12-month price-to-sales (P/S) multiple of 3.06X, which is significantly lower than the sector average of 6.43X. This discount adds to the appeal for long-term investors.

Compared with other semiconductor players, Micron has a lower P/S multiple than Marvell Technology and QUALCOMM but a higher multiple than Intel. At present, Marvell Technology, QUALCOMM and Intel trade at P/S multiples of 6.88X, 3.86X and 1.75X, respectively.

Given its superior scale and exposure to AI growth, MU’s relative valuation strengthens the case for continuing to hold the stock.

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 soft 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.

Conclusion: 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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