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Memory and storage stocks are recovering after a sharp post-mid-term selloff, and value investors are focusing on Micron technology (NASDAQ:MU | MU Price Prediction) for its low earnings multiple and buyback power. Micron stock is at $733.98, up 6% in afternoon trading. The gain only recoups some of the ground Micron lost in last week’s chip rout.
AI stocks attract investors, however Nvidia (NASDAQ:NVDA) moves on its own company-specific news. Against this backdrop, Micron trades at a trailing 12-month price-to-earnings (P/E) ratio of 9x and a forward P/E of 4x. Both multiples come from market data and move with the stock price.
Micron Buyback Calculations Attract Value Investors
CNBC Half-time report gave the bullish case heavy media coverage on Friday, November 6, when a panelist claimed that Micron would repurchase $100 billion of stock at its depressed multiple. This figure reflects the opinion of one panelist. What Micron has actually authorized is a $35.16 billion stock repurchase program that will begin on December 9th.
Micron’s Q4 FY2026 report on September 30 gives the bulls plenty of avenues to work with. The company’s revenue soared 379.3% year-over-year (YoY) to $54.23 billion, and its free cash flow reached $33.2 billion for the quarter. For the first quarter of fiscal 2027, management guided Micron’s revenue to $61.5 billion, plus or minus $1.5 billion.
During Micron’s post-earnings call, President and COO Manish Bhatia said, “We are seeing stronger demand drivers than before. » Bhatia added: “As we worked through our FY27, we reported that over 75% of our shipments were committed for the year. »
Seagate and Western Digital outpace Micron’s rebound
Hard drive makers are rallying more strongly than Micron, which goes against the valuation-first angle. Seagate Technology (NASDAQ:STX) stock is at $512.44, up 11%. In the meantime, Western digital (NASDAQ: WDC) stock is at $291.63, up 11%.
Demand for hyperscaler and AI storage continues to fuel both names. On October 27, Seagate reported revenue of $4.23 billion for the first quarter of fiscal 2027, up 61% year-over-year, and revealed that a major cloud provider had qualified its Mozaic platform as heat-assisted magnetic recording (HAMR). Western Digital’s Oct. 22 report showed revenue of $4.38 billion, up 55.5% year-over-year, as well as a 17% dividend increase.
In terms of forward metric, drive makers are posting higher multiples than Micron. At 24x, Seagate’s trailing P/E sits well above the other three names, with its forward P/E at 12x. Micron and Western Digital share a running P/E of 9x, although Western Digital’s forward multiple stands at 11x.
SanDisk (NASDAQ: SNDK) is also the center of attention. The flash specialist has the lowest trailing P/E of the four, at 7x, plus a forward P/E of 4x. An eight-for-one stock split for SanDisk takes effect on November 19.
How Micron’s memory model differs from disk manufacturers
Micron makes dynamic random access memory (DRAM) and NAND flash, including high-bandwidth memory (HBM) that pairs with AI accelerators. The price of memory tends to move with industry supply, giving Micron’s earnings a stronger cyclical advantage. Strategic customer agreements now give the company visibility into demand over several years.
Seagate and Western Digital sell high-capacity hard drives to cloud operators and do not manufacture DRAM or NAND. Both drive makers are increasing capacity by packing more data onto each drive, and both have locked up much of their future supply under long-term customer agreements. SanDisk, spun off from Western Digital, now operates as a purely specialty flash storage company, bringing it closest to Micron’s NAND business.
Micron’s cheap multiples face cyclical test
CNBC’s Mike Santoli summed up the skeptics’ view: “If the market believed in earnings, they wouldn’t be less than four times.” » Memory is a cyclical business, and a low P/E may indicate that Micron’s earnings are near a peak. Bears also point to Micron’s heavy capital spending and reliance on AI expansion.
The bulls object to Micron’s own outlook, which management described in its post-earnings call this way: “We have stated that we really don’t have visibility on when supply and demand will balance out.” Micron’s next test will be whether its earnings hold up as the new buyback program begins buying back shares. A conservative investment approach might make sense while the debate over Micron’s maximum profits continues.
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