Like most of its peers in the semiconductor industry, Micron Technologies (NASDAQ:MU) has seen its share price fluctuate wildly in recent weeks, but the stock has been selling off to some degree since peaking in June of last year.
The total selloff in the last 12 months has reached 42.0%, including a drop of 29.5% in just the last 30 days.
Could Micron be a good stock to buy now for investors looking for undervalued deals in the chip industry?
Don’t Look at MU Share Price
While shares are down more than 40% in the last 12 months, Micron’s revenues and earnings have both been reasonably positive.
The top line has climbed year-over-year in each of the last six quarters, finishing its most recently reported trailing 12-month period with an increase of over 70% to $31.3 billion.
Net income growth has been significantly lumpier, but Micron’s net income has returned to consistently positive territory after a string of losses in 2023 and early 2024.
Micron’s fiscal Q2 2025, which ended in February, saw revenue reach $8.05 billion. Though this was somewhat lower than the $8.71 billion it generated in the previous quarter, it was still a massive improvement over the $5.82 billion revenue number from the year-ago period.
A similar trend played out in earnings per share, which were $1.41 for the quarter. This was down from $1.67 in fiscal Q1, but nearly double the year-ago quarter’s $0.71 per share.
For fiscal Q3, Micron expects revenues of around $8.80 billion and EPS of $1.37. Although earnings growth is expected to slow down, it’s still projected to deliver an annualized EPS growth rate of 7.6% over the next 3-5 years.
Micron Has a Domestic Advantage Most Miss
There’s no two ways about the fact the AI-fueled data center boom of the last few years has seen many chipmakers surge in terms of both revenue and earnings. Micron, however, has the unique advantage of making memory chips in the United States at a time when a huge push to re-shore chip manufacturing is taking place.
It has been manufacturing chips at its Virginia facility for 22 years, which is an impressive advantage in and of itself. Thanks to a $6.1 billion grant under the CHIPS Act, though, the company will be able to invest in modernizing this Virginia facility while also building cutting-edge facilities in Idaho and New York.
Management plans to invest $125 billion in its semiconductor manufacturing over the coming decades. While rivals are working to reshore their semiconductor manufacturing, Micron already has a huge leg up when it comes to making memory chips by virtue of its existing domestic production base.
This is especially relevant in light of the current uncertainty around semiconductor tariffs. Though semiconductors and other electronics were originally given an exemption from the high tariffs on goods coming from outside of the US, President Donald Trump recently stated that his administration is considering tariffs on these goods and that they would be imposed sometime in the fairly near future.
Yes, Micron manufactures chips abroad, too, but domestic manufacturing and ongoing investment US facilities offer protection not enjoyed by most competitors.
Micron’s Trading at Just 17x Earnings
The selloff of the last year has brought Micron to a fairly attractive valuation of 17.0x earnings, 2.6x sales and 1.6x book value.
Though it may be unwise for investors to expect quite this level of return from the stock, there seems to be a decent chance that Micron is actively undervalued.
It’s also worth noting that Micron pays a dividend, though the payout itself hasn’t grown consistently each year the way most dividends do. Right now, MU yields 0.7% and pays $0.46 per share throughout the year.
Although the company’s dividend payout ratio of 11.1% would seem to offer considerable room for dividend growth, this hasn’t been the case. MU has been paying out $0.115 quarterly since mid-2022, and it’s not clear when the dividend could actually begin rising again.
Is Micron a Good Stock to Buy Now?
Now is a good time to buy Micron given that the average analyst price forecast for the stock is $128.34, a a 80% hike from its last close.
On the surface, strong growth and a huge head start in domestic semiconductor manufacturing both bode well for shareholders. The selloff of the last year, meanwhile, may have left the stock undervalued on the basis of its long-term potential.
That isn’t to say that the company doesn’t face its fair share of bumps in the road up ahead. Demand for memory chips is under assault, and persistent headwinds will reduce Micron’s ability to sell its chips at attractive prices.
An expected slowdown in AI data center investment is particularly troublesome, as this was previously expected to keep demand high for the foreseeable future.
With that said, Micron does appear to be in a decent position to weather a downturn. Current assets total $24.70 billion compared to just $7.88 billion in current liabilities.
In the event of a demand downturn for memory chips, Micron could also have a leg up due to being able to produce in the US and avoid the Trump administration’s pending tariffs on semiconductors.
Overall, the turbulence associated with semiconductor stocks and the effects of a market downturn certainly makes MU a volatile holding in the short term, but the share price has enough potential upside in it to make it a risk worth taking for many.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.