During the October 1 episode of Mad Money, Jim Cramer observed that the results and long-term customer agreements suggest Micron Technology, Inc. (NASDAQ:MU) is becoming less dependent on its historic boom-and-bust cycle. Micron is also one of the AI stocks that will go to the moon.
Cramer Sees a Less Cyclical Micron
I’ve been thinking too many people let the action in a stock tell them the story, even if it’s the wrong story. Last night, Micron, one of the largest semiconductor companies in the world, reported a phenomenal quarter. We own it for the Charitable Trust and it was much, much better than what we were looking for.
Micron Technology, Inc. reported fiscal fourth-quarter revenue of $54.23 billion, up from $11.32 billion a year earlier, while non-GAAP earnings per share reached $33.42, compared with $3.03 a year earlier. Non-GAAP gross margin climbed to 87%, from 45.7%. The company guided for fiscal first-quarter revenue of $61.5 billion, plus or minus $1.5 billion, and non-GAAP EPS of $38.15, plus or minus $1.00. Cramer said:
Demand for the high bandwidth memory chips, the ones that belong in the data center, is insane. These chips are in such short supply that customers have been trying to sign strategic customer agreements with Micron that would last the next few years… They can’t afford to be without high bandwidth memory. It’s an amazing statement for a company that used to live or die by the day-to-day vicissitudes of DRAM pricing.
Micron has significantly expanded its Strategic Customer Agreements, which management said cover more than 35% of estimated revenue through 2030. The agreements extend into 2031, and customer financial commitments have reached $32 billion. Cramer said, “Now they can lock customers up for years because their best chips are so scarce. Cyclical to secular, my favorite kind of redo.”
Micron’s Valuation Reflects Expectations for Higher Earnings
Micron Technology, Inc.’s low forward P/E is partly a result of the sharp increase in earnings expected over the next year. As per Yahoo Finance, Micron was at about 7.02x forward earnings as of September 23. SK hynix traded at about 5.44x forward earnings on the same date, while SanDisk traded at about 8.04x. The broader U.S. semiconductor industry had a forward P/E of 37.29x in January 2026, according to NYU Stern’s Aswath Damodaran. That industry-wide benchmark covers companies with different business models, so it is better viewed as a broad reference point than a direct comparison with Micron.
The more important point is that Micron’s low forward P/E partly reflects the enormous earnings increase embedded in current estimates. A cyclical company can look unusually cheap when profits are near a peak because the denominator in the P/E ratio is temporarily elevated. That makes the sustainability of current earnings more important than the headline multiple alone.
During the episode, Mad Money host Cramer said:
I know that when I was out there in August, Micron had 16 long-term contracts to provide DRAMs. Now that’s 26 … Every time there’s a new contract, the company becomes less cyclical and more secular. Given its newfound consistency, it’s nuts that the stock still sells for six times next year’s earnings estimates.
The figures reflect different estimates and dates, so they are not directly comparable. You can also check if Micron stock is cheap enough to survive lower memory profits.
Bear Case: Pricing and Capacity
A risk for Micron Technology, Inc.’s is that today’s exceptional margins might be difficult to maintain once additional industry capacity reaches the market. Management expects approximately 86.25% gross margin in fiscal first-quarter 2027, showing how much earnings could change if memory pricing eventually weakens. The company spent $27.37 billion on net capital expenditures in fiscal 2026, while management expects capital spending to increase further in fiscal 2027. It expects approximately $25 billion of capital expenditures in the first half of fiscal 2027, with spending higher in the second half.
The risk is not simply that Micron is spending heavily. The bigger concern is whether new capacity arrives before demand can absorb it. If that happens, memory prices could weaken, and margins could contract, reducing the earnings base that currently makes Micron’s forward valuation look low. The customer agreements reduce some of that exposure but do not eliminate it.
Hedge Fund Ownership Rose as Short Interest Remained Limited
Insider Monkey, which tracks more than 1,000 hedge funds, reported that 184 hedge funds held Micron Technology, Inc. in the second quarter of 2026, up from 154 in the first quarter. Short interest was also relatively limited at approximately 2.45% of the public float. A concerning point is whether long-term HBM demand and customer agreements can keep a larger portion of today’s unusually high profitability intact as billions of dollars of new manufacturing capacity comes online, while pricing, capacity and the durability of AI-related demand remain important to the earnings outlook. It is worth noting that Cramer said:
Buy it. Buy this dip. I did it because the story, as great as it was when we visited in August, had gotten even better, maybe much better… The end of Micron’s relentless boom-and-bust cycle has arrived at last. That means the stock can still be bought, but maybe more important, it can’t afford to be sold. If you want to short this thing knowing that Micron will be able to buy back its own stock aggressively come December, I think you’re digging your own grave.
In a previous episode Cramer explained why he has a “giant position” in Micron for the Charitable Trust.
READ NEXT: Jim Cramer Highlights NVIDIA (NVDA) Architecture Framework And Historic Share Buyback and Jim Cramer Likes HEICO (HEI) but Warns About Aerospace and Boeing (BA).
Hedge Fund Resource Center