MU

Operationally Micron is firing on all cylinders. FY2025 revenue jumped 48.9% to $37.4B and net income exploded ~998% to $8.54B as the AI cycle lifted DRAM. Management is explicit: 'AI-driven demand is accelerating and is outpacing industry supply,' with DRAM sales +62% on a low-40% range increase in average selling prices and a richer HBM mix. Consolidated gross margin swung from 22% in FY2024 to 39.8% in FY2025 (and from negative 9% in FY2023), operating margin reached 26.1%, and operating cash flow doubled to $17.5B. The balance sheet is sound — liabilities/equity of just 0.53x, $9.64B cash against $11.5B long-term debt, and $48.6B retained earnings. As a business in this moment, it is excellent.

The problem is the price, not the company. At $1,048.51 the stock trades at 138x trailing diluted EPS of $7.59 and 31.5x sales — software-like multiples applied to a deeply cyclical, capital-intensive memory maker. Crucially, that 138x P/E sits on top of PEAK-cycle earnings: a high multiple on peak profits is the opposite of what cyclicals deserve. The provided five-year history is the warning — revenue collapsed from $30.8B (FY2022) to $15.5B (FY2023) with a $5.83B net loss and negative 9% gross margin, then earnings cratered to $778M in FY2024 before this year's rebound. Memory ASPs that rose 40%+ can fall just as fast when supply catches demand, which the MD&A concedes Micron actively manages around.