Micron Becomes Cheapest S&P 500 Stock at 4.5× P/E
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- Micron now trades at a forward price‑to‑earnings ratio of 4.5, the lowest of any S&P 500 stock, versus the index’s weighted forward P/E of about 20.
- Micron shares fell 7% on Thursday, closing at $355.46, a 23% decline from the March 18 peak of $461.73, thus entering bear‑market territory.
- Analysts raised Micron’s 12‑month EPS estimate to $79.58, up from $44.10 at February’s end and $35.97 a year earlier, after the company’s earnings call highlighted strong pricing and demand.
- Memory‑chip prices have surged due to a supply‑demand imbalance fueling AI build‑out, allowing Micron to project an 81% gross margin for the current quarter.
- Micron increased its capital‑expenditure forecast to $25 billion for the fiscal year, up from $20 billion, and signaled even heavier spending next year, raising concerns about future pricing power.
- Deutsche Bank analyst Melissa Weathers warned investors to exercise caution given the historically cyclical nature of the memory market and past bust cycles.
- Mizuho analyst Jordan Klein noted the decline occurred amid a broader technology‑sector sell‑off and rotation out of semiconductor and AI‑hardware winners.
Why it matters: Value‑focused investors gain a rare deep‑value entry as Micron’s forward P/E plummets below the S&P 500 average, while shareholders risk losses if the AI‑driven memory boom peaks and margin expansion is eroded by new capacity and cyclical downturns. The broader tech sell‑off adds pressure on the stock further.
