Trading at 7x Earnings in an AI Boom? This Is the ‘Stupid Cheap’ Stock Your Financial Advisor Won’t Tell You About

Consider Micron Technology (NASDAQ:MU | MU Price Prediction) here because a forward FY 2027 earnings multiple of 7x on a company sitting at the literal center of the AI memory bottleneck is a valuation that almost never exists at the heart of a megatrend, and the only reason it does now is that your advisor still thinks “memory” means 2018.

The numbers do the arguing. Micron just reported fiscal Q2 2026 revenue of $23.9 billion, up 196% year-over-year, with non-GAAP EPS of $12.20 and gross margins of 75%. Guidance for Q3 calls for $33.5 billion in revenue, EPS of $19.15, and gross margin near 81%. Against a share price of $884 as of this writing, the market is still pricing this like a commodity DRAM shop heading into a downcycle. It is doing the opposite.

By the time you read this, Micron may have even crossed $1,000. The rally is accelerating due to investors identifying how discounted the stock is compared to its earnings. And each time the rally accelerates, the FOMO will send it even higher.

The Valuation Disconnect

NVIDIA trades north of 24x forward earnings for FY 2027 (ends in January 2027). Broadcom (NASDAQ:AVGO) , almost the same. Micron, the company supplying the HBM that makes those GPUs functional, trades at a forward multiple of 7x. CEO Sanjay Mehrotra noted on the Q2 call that “AI demand is driving DRAM and NAND data center bits TAM to exceed 50% of the industry TAM for the first time in calendar 2026.” The mix is shifting permanently, and the multiple has not caught up.

Income and Cash Returns

For a retirement portfolio, the cash story matters. Free cash flow hit $6.9 billion in Q2 FY2026, a quarterly record exceeding the prior Q1 record by 77%. The balance sheet carries $16.7 billion in cash and a net cash position of $6.5 billion. Management responded by approving a 30% increase in the quarterly dividend. The yield is small, but the direction and the coverage are what a long-duration holder wants to see.

The Catalyst Is Structural

Micron has begun volume shipment of HBM4 36GB 12-Hi designed for NVIDIA Vera Rubin, with HBM4E ramp expected in calendar 2027. The company signed its first five-year strategic customer agreement, replacing the old one-year LTA model with multi-year supply commitments. Analyst consensus is a Strong Buy, especially after the recent UBS price target now to $1,625, up from $535. Wall Street is rushing to push MU stock up to that valuation. Micron is already near $1 trillion as of this writing.

The Cyclicality Argument, Addressed Head-On

Start with the supply side: HBM consumes more wafer per bit than commodity DRAM, cleanroom build-out takes years, and construction lead times are measured in years, not quarters. That is a structural constraint, not a sentiment call. Mehrotra stated plainly that “some of our key customers, we are able to fulfill only 50% to two-thirds of their demand in the medium term,” and that supply and demand stay tight beyond calendar 2026. That is the difference between this cycle and 2018.

At 7x forward earnings, with hyperscaler order books extending into 2027 and the only U.S.-based memory fab footprint, the work has already been done for you. By the time this rally finally slows down or the “bubble” pops, it’s more likely the stock will be up significantly from here. Plenty of capital is available in the markets and companies are spending generously on AI, so it’s unlikely Micron is close to topping out.