Micron Technology: The Most Undervalued AI Infrastructure Play of 2026

Explosive Earnings Growth and Margin Expansion

Micron's financial performance in 2025 underscores its transformation into a high-margin growth story. For Q4 2025, the company reported revenue of $11.32 billion, a 21.6% increase from the prior quarter and a 46% jump year-over-year according to Q4 results. GAAP net income surged to $3.20 billion, or $2.83 per diluted share, while non-GAAP net income reached $3.47 billion, or $3.03 per diluted share according to financial reports. These results reflect the company's ability to leverage AI-driven demand in data centers and enterprise computing, where Micron's DRAM and NAND products are critical components.

Looking ahead, management has signaled confidence in FY 2026, projecting continued revenue growth and margin expansion. Analysts anticipate that Micron's earnings per share (EPS) could nearly quadruple to $32.14 in the next fiscal year according to investment analysis. This trajectory is underpinned by structural tailwinds: AI workloads require exponentially more memory, and Micron's capacity to meet this demand-combined with its pricing power-positions it to outperform peers.

HBM Supply-Demand Dynamics: A Structural Tailwind

The most critical catalyst for Micron's growth lies in the HBM market, where the company is rapidly gaining market share. HBM, a high-performance memory solution essential for AI accelerators and GPUs, is experiencing a supply crunch driven by complex manufacturing processes and limited production capacity. Micron's HBM supply for 2026 is already fully committed under price and volume agreements, reflecting the intensity of demand.

According to industry analysis, Micron has gained 10 percentage points of HBM market share in the past year according to market research. This momentum is set to accelerate as the total addressable market for HBM expands from $35 billion in 2025 to $100 billion by 2028 according to industry forecasts. Micron's roadmap, including the development of HBM4, aligns with this growth trajectory, ensuring its technological leadership in a market where supply constraints will persist for years.

The company's dominance in HBM is further amplified by broader memory shortages in DRAM and NAND, which are driving up prices and margins across the industry. With AI adoption accelerating, these dynamics create a self-reinforcing cycle: higher demand for HBM, tighter supply, and stronger pricing discipline-all of which benefit Micron's bottom line.

Valuation Dislocation: A Mispricing Opportunity

Micron's forward P/E ratio of 8.96 according to market data starkly contrasts with the Nasdaq-100's forward P/E of 26.33 according to financial data, highlighting a significant valuation gap. This dislocation is puzzling given Micron's strong earnings growth and structural advantages in the AI memory market. Analysts argue that the market is underestimating the company's ability to sustain its momentum, particularly as AI infrastructure spending accelerates in 2026 according to market analysis.

The case for a re-rating hinges on two factors: earnings growth and multiple expansion. If Micron's EPS reaches $32.14 as projected according to earnings forecasts, and the stock trades at a multiple closer to the Nasdaq-100's 26x, its price could rise to over $835-a 150% increase from current levels. Even a more conservative multiple of 15x would imply a 60% upside. This potential re-rating is further supported by Micron's Q1 2026 results, which saw revenue surge 56.7% year-over-year to $11.32 billion, with Q2 guidance of $18.3 billion to $19.1 billion according to financial reports.

Conclusion: A Compelling Long-Term Play

Micron Technology is not merely a beneficiary of the AI boom-it is a foundational enabler of the technology's evolution. Its explosive earnings growth, leadership in HBM, and favorable supply-demand dynamics create a rare combination of near-term momentum and long-term durability. The current valuation dislocation relative to the Nasdaq-100 offers an attractive entry point for investors willing to bet on the company's ability to capture value from the AI infrastructure revolution.

As 2026 unfolds, the market is likely to reassess Micron's prospects, particularly as AI-driven demand for memory continues to outpace supply. For now, the stock remains a compelling case of undervaluation-a bargain priced for the present, not the future.