Artificial intelligence (AI) stocks have been leading the market higher for the past few years, but investors hit the emergency brake in 2026, sending many tech stocks suddenly tumbling. The move into value and small-cap stocks after years of underperformance by itself isn’t necessarily a bad move. There are some great bargains in the space. But this rotation has also left the tech sector with some screaming bargains.
Perhaps the best of the bunch is Micron Technology (NASDAQ: MU), which has been absolutely punished despite reporting an incredible earnings report last month and issuing robust guidance. The nosedive in the stock has left it trading at a forward price-to-earnings (P/E) ratio of under 4 times fiscal 2027 (ending in August) analyst estimates. That’s an insanely cheap valuation for a company with Micron’s current growth profile, although investors are clearly questioning its earnings sustainability.
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Micron is one of the big three DRAM (dynamic random access memory) makers, together with its Korean counterparts SK Hynix and Samsung. The three form an oligopoly but have historically been very competitive; as a result, DRAM is widely viewed as a commodity. Its minuscule valuation stems from the boom-and-bust cycles that the DRAM market has experienced in the past. DRAM is currently in very short supply, and thus prices have shot up, which is the biggest reason behind Micron’s strong results. However, investors clearly don’t think these dynamics will last.
Right now, investors are very interested in calling a top in the DRAM market, but that may be the wrong way to think about it. Instead, they should look at how high the floor has been raised. After all, this does not look like your ordinary DRAM cycle.
The DRAM market is being driven by the emergence of high bandwidth memory (HBM). To optimize performance, graphics processing units (GPUs) and other AI chips need to be packaged with this specialized form of DRAM. As such, the biggest driver of the current DRAM cycle is inexorably linked to the massive build-out of AI chip clusters in AI data centers. That’s a structural growth driver, not just a typical commodity trend.
At the same time, all three big DRAM makers are working to sign longer-term contracts for HBM of between three and five years with base volume commitments, which is a stark contrast to the typical yearly or often quarterly agreements of the past. This is all set to raise the floor on the DRAM market and make it less cyclical. That new floor and the secular growth trends in AI infrastructure are why Micron’s stock looks like a buy after this dip.
