Market is pricing MU wrong, Memory is not cyclical anymore
u/Pancakez_117 ·
Reddit — r/ValueInvesting
· May 05, 2026 at 17:52
· ⬆ 28 pts
· 💬 58 comments
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AI Summary
Summary
The post argues that Micron (MU) is mispriced because memory, particularly HBM for AI, is no longer cyclical due to manufacturing complexity and multi-year customer contracts.
The author believes MU deserves a higher valuation multiple (currently ~9x forward P/E) comparable to Nvidia (30x+), as AI demand for memory is structurally tied to compute bottlenecks.
Quality assessment: Speculative but reasoned DD, relying on a secular-growth narrative that challenges historical cyclicality; lacks concrete financials or peer comparisons beyond P/E.
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I keep seeing people say Micron is going to crash soon because "memory is cyclical." That used to be true back when they just made cheap RAM for laptops and smartphones. But things have totally changed, and honestly, the market is pricing MU completely wrong right now.
Look at the old boom-and-bust cycle. They used to make way too much memory, prices would crash, and the stock would tank. That cycle is basically dead now. Making this new High-Bandwidth Memory (HBM) for AI is insanely hard and takes up a massive amount of factory space. Because of that, they literally can't oversupply the market. MU is already completely sold out through the rest of 2026. You don't get a "bust" when your biggest customers are locked into multi-year contracts and actively begging for more supply.
Then there's the valuation gap, which makes zero sense. Right now, people are happily paying 30x earnings or more for Nvidia, but MU is sitting around a 9x forward P/E. Why the huge discount? An Nvidia GPU is basically a $40,000 brick without Micron's HBM feeding it data. As AI models get more advanced, they don't just need faster compute, they need way more memory per chip. MU's business scales exactly the same way NVDA's does in this AI race. If Nvidia gets a massive premium for being a hardware bottleneck, MU should absolutely be getting a much higher multiple since memory is the exact same kind of bottleneck.
The biggest bear argument I see is that Microsoft, Meta, and Google will eventually stop spending tens of billions a year on new data centers. They won't.
This isn't some side project for Big Tech; it's a survival arms race. If Google stops buying servers, ChatGPT takes over search. If Meta stops building, their open-source models fall behind. If Microsoft blinks, they lose the cloud war. These companies have massive piles of cash and they are fighting for the future of the entire tech industry. They are literally making deals to restart nuclear power plants just to keep the servers running. They cannot afford to stop building.
Stop looking at MU like it's a legacy hardware company from 2018. It's a core AI infrastructure play now, and Wall Street is asleep at the wheel on how it should be valued.
TLDR; as long NVDA is priced for growth, then so should memory as their market is tied
HBM for AI is supply-constrained, MU is sold out through 2026, and Big Tech capex is locked in by competitive survival (e.g., restarting nuclear plants). The market still values MU as a cyclical memory maker, creating a mispricing if AI-driven demand has structurally removed the boom-bust cycle. Long MU as a re-rating play, betting that the market will eventually apply a growth multiple closer to AI peers like NVDA. A repeat of the memory cycle if oversupply returns, a sharp slowdown in AI capex, or a macro downturn that hits all hardware. The top comment warns this is a “top confirmed” signal.