The current Micron (Nasdaq: MU) is the purest AI storage play long-term investors can buy, and from a valuation perspective, it's not even a competition in the same league.
The stock price is $966.78, with a forward P/E ratio of only 13x. This means the market is valuing this storage chip leader, which is tied to the demand from AI super-giants, like a value stock. Micron's profitability tripled in the most recent fiscal year, making this valuation window extremely rare.
Valuation Hasn't Caught Up with Earnings Power
Micron's trailing twelve-month P/E is 21x, but the real number to watch is the forward P/E—it's only 6x. This number is based on the Q4 FY2026 guidance: $50 billion in revenue, non-GAAP EPS of $31, and a gross margin of approximately 86%.
The average price target from 45 Wall Street analysts is $1501.98—with 9 giving a Strong Buy, 31 a Buy, 5 a Hold, and zero Sell ratings. You can count on one hand the number of stocks in the entire U.S. market with zero bearish sell-side analysts.
How Explosive Was This Earnings Report?
Micron's Q3 FY2026 (ending May 28th) revenue was $41.46 billion, up 345.72% year-over-year! Non-GAAP EPS was $25.11, marking the seventh consecutive quarter of exceeding expectations.
Even more staggering is the free cash flow—$18.3 billion in a single quarter. Furthermore, Micron has already shipped over $1 billion worth of HBM4 (5th generation High Bandwidth Memory), and the ramp-up speed for HBM4 12-high is twice that of HBM3E 12-high, with demand still accelerating.
$100 Billion in Long-Term Contracts, the Cycle Theory Rendered Obsolete
This is the core point—Micron has already signed 16 strategic customer agreements, all of which are rigid "take-or-pay" contracts, covering the period from 2026 to 2030. These contracts lock in approximately $100 billion in revenue, including minimum purchase volumes and price floors.
Management has explicitly stated that these floor prices are "well above the peak gross margins of any past cycle." In other words, the old logic that "memory chips are cyclical" has been completely invalidated by these $100 billion contracts.
Additionally, Micron pays a quarterly dividend of $0.15 (increased by 30% this fiscal year) and has repurchased $650 million worth of shares in the past nine months.
Why Micron Is a Better Buy Than Western Digital or Seagate
Western Digital and Seagate are direct competitors in storage, but their common shortcoming is that their main businesses are HDD and NAND, with no HBM business whatsoever. HBM is precisely the highest-margin, fastest-growing segment in AI infrastructure.
Micron's core data center business achieved an 87% gross margin last quarter, a figure that HDD-focused competitors can't even reach half of. Micron is essentially taking the lion's share of the money in the AI storage space.
The Only Risk—Already Locked Down by Contracts
The only bearish argument left for Micron skeptics is that "the memory chip cycle will crash." But those $100 billion strategic contracts mentioned earlier have already established a price floor.
Management has also stated that tight supply conditions will persist beyond 2027. Even renowned financial host Jim Cramer posted "How FAB!!" this week, praising Micron's manufacturing capabilities.
A 13x forward P/E, $100 billion in contracts locked through 2030, exploding demand for HBM4—Micron is that undervalued long-term AI storage leader, shining brightly right in front of you.
