Micron: AI Memory Monopoly at Value Price?

Micron Technology (NASDAQ:MU) offers a unique opportunity in AI memory, securing approximately $100 billion in contracted revenue from take-or-pay agreements extending from 2026 through 2030. These contracts guarantee minimum volumes and prices, supporting gross margins well above historical peaks. As of the article's publication date, Micron's Core Data Center unit demonstrated exceptional performance with 87% gross margins in the last quarter, a figure unmatched by storage peers Western Digital and Seagate Technology, neither of which have High Bandwidth Memory (HBM) exposure.

The company's financial performance has been remarkable, with fiscal Q3 revenue surging 345.72% year-over-year to $41.46 billion, and non-GAAP EPS reaching $25.11, extending a seven-quarter streak of earnings beats. Free cash flow in a single quarter hit $18.30 billion. Micron has already generated over $1 billion in HBM4 revenue, with its HBM4 12-high ramp progressing twice as fast as its HBM3E 12-high. The stock trades at a forward P/E of around 6, reflecting Q4 FY2026 guidance of $50 billion in revenue and $31 non-GAAP EPS. Wall Street analysts, with an average price target of $1,501.98, overwhelmingly recommend buying the stock, with 40 analysts rating it a buy and zero recommending a sell.