u/HatedMoats ·
Reddit — r/ValueInvesting
· May 29, 2026 at 11:19
· ⬆ 90 pts
· 💬 119 comments
| View on Reddit ↗
AI Summary
Summary
The post argues that Micron’s low forward P/E (~8-10x) is misleading because current earnings are fueled by an AI-driven shortage cycle that may not be sustainable.
The author warns against blind reliance on “cheap” metrics, emphasizing that cyclicals can appear cheap at earnings peaks and then get crushed when estimates are revised down.
The analysis is well-reasoned, pointing to the structural risk of supply/demand normalization, oversupply, and collapsing ASPs—making this a cautionary piece rather than hard DD or noise.
Score90
Comments119
Upvote %78%
▶ Full Post Text
I've seen this notion all over Twitter and multiple times on Reddit as well.
People arrogantly arguing with me about how the company is still undervalued and I'm just bitter because it ran without me :). And I'm confused if this is just top complacency of a bull run, deliberate ignorance based on emotions and FoMO, or both.
Yes, Micron looks optically cheap, it's trading around 8-10x forward earnings, with a very low PEG.
That sounds insane for an AI memory winner.
But before parroting “cheap” everywhere, do people at least understand what the E in P/E actually is?
That denominator is not a law of physics... It's an earnings estimate built during a period of huge AI demand, tight memory supply, and extremely strong pricing.
MU is only truly cheap if roughly $100ish EPS is durable, or at least repeatable for several years. Not just pulled forward by a shortage cycle.
Can bulls be right?
Absolutely.
HBM, AI infrastructure demand, long-term customer commitments, and a more disciplined memory market could mean this cycle is structurally better than the old ones.
But can supply/demand normalise, oversupply return, ASPs roll over, and forward EPS estimates get revised down hard and quickly?
Also absolutely.
Memory hasn't suddenly become risk-free investment because the PEG looks silly. It looks silly for a reason. And if people don't understand why it looks silly (I had people telling me how Lynch would love the opportunity of investing now for god's sake...), they shouldn't be investing in individual stocks.
MU may still be cheap. But “low forward P/E” is only a bargain if the forward earnings are real and sustainable.
And that's an assumption, a big one at that, not a fact.
Be bullish if you want. Just don't be an overconfident twat at what could also be a classic cyclical earnings peak.
So I'm genuinely curious...
Do people really not understand this?!
MU’s current EPS (~$100) depends on tight memory supply and peak AI demand; such conditions are historically transient. Buying based on a low forward P/E ignores the cyclical risk—earnings could revert sharply, making the stock actually expensive. Avoid MU unless you have high conviction that the current earnings trajectory is durable, which the author doubts. If AI memory demand proves structurally superior (HBM long-term contracts, disciplined capex), earnings could stay elevated, negating the bear case.