If we look at Micron's valuation purely from a 12M-forward perspective, this puts the EPS at $114/share by 1st July 2027, and against today's price, we are talking about a forward P/E of 9.12x.
FactSet is expecting EPS growth as follows:
FY26 Expected EPS: $73.12E, 782% YoY growth.
FY27 Expected EPS: $154.66E, 112% YoY growth.
FY28 Expected EPS: $166.34E, 8% YoY growth.
This is a meaningful increase from the EPS expected when I wrote my last article in May, driven by stronger Q3 earnings and the more optimistic guidance for Q4. Previously the analysts were also anticipating an EPS decline in FY28, pointing to the end of the cycle, but I already explained earlier why this is unlikely to materialize.
Micron's historical valuation was anywhere between 3 and 50 P/E, underscoring the historical cyclical nature of the business. During periods without excess demand or excess capacity, the valuation is more 14-20x P/E, giving us a sense that the P/E we are paying today isn't extreme at all.
This brings me to my price target and the title of this article. If we assume the $114 EPS in 12M time and apply an average valuation of 15x P/E, which is actually a contraction from today's 16.6x, we would land at $1,725/share by July 2027. Naturally, this is just a price target, and the earnings forecast can move higher or lower, depending on how the overall Hyperscalers CapEx story develops, but I see this as a base case, with 15x P/E as a fair value for Micron.
A bull case would be an increase to P/E of 17-20x, which would put the price at $1,955 - $2,300.
I don't expect any meaningful extra production capacity deployment before 2028, so while the competition is fierce from SK hynix and Samsung, the combination of strong demand and lack of supply will hold the prices of memory chips high for longer than I previously expected.
Investor's Takeaway
The evidence is pointing to a reversal in the memory-chip industry behavior, and what used to be a commodity may be less volatile in the future, supported by long-term contracts, which set a floor on price and revenue for all the peers.
The super cycle is playing into Micron's cards, giving the company an edge to dictate its own terms and negotiate favorable conditions, as memory chip prices remain very high, driven by a lack of capacity. Yes, new capacity will be deployed, but unlikely ahead of 2028, giving a lot of breathing room to the industry. Still, I don't think we've moved away completely from the commodity-like cycles, but it will be delayed, perhaps into 2029-2030.
Micron is in a strong position right now to capitalize on the high prices and limited availability, agreeing to long-term lucrative contracts, and its EPS will grow massively in the next couple of years. I am estimating $115 EPS in 12M time, and if we apply 15x P/E (which is my fair value), Micron's stock price could reach $1,725 by July 2027. If the EPS growth surprises to the upside, it could be well above $2,000.
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