Micron’s $250 Billion Spending Plan Has BofA Saying ‘Time to Buy’

Micron Technology (MU) saw a significant pullback after posting a record quarterly report. But with the company unveiling a massive $250 billion long-term investment plan, Bank of America analysts are turning bullish, arguing the current price offers a buying window. As of after-hours trading on July 9, Micron shares were at $991.64, up 4.52% from the prior close of $948.80. During the regular session, the stock hit a high of $1,035.50, opened at $1,016.51, and traded in a range of $987.13 to $1,035.50.

BofA: A Buy Signal Under a Massive Investment Plan

According to Barron's, Micron announced a $250 billion investment plan on July 9. BofA Global Research analysts immediately flagged a buying opportunity, noting that the stock's recent retreat from highs has attracted dip buyers.^[Barron's] The report noted that Micron shares have surged nearly 700% over the past 12 months.^[Barron's]

The $250 billion plan is aimed at expanding Micron's memory chip capacity. The announcement comes as the company benefits from surging demand for high-bandwidth memory (HBM) chips used in AI. BofA analysts believe that despite the enormous scale of the investment, Micron's core position in the AI memory market and its recent price pullback make the current valuation attractive.

Record Earnings and Strong Guidance

Micron delivered a standout performance in its fiscal Q3 (ended May 28). According to The Motley Fool, revenue hit a record $41.5 billion, up 346% from $9.3 billion a year ago and 74% from $23.9 billion in the prior quarter.^{[Motley Fool]} Non-GAAP EPS came in at $25.11, with gross margin hitting a company-record roughly 85%.^{[Motley Fool]}

Even more striking was the guidance. Management guided for Q4 revenue of roughly $50 billion and adjusted EPS of about $31, representing increases of roughly 20% and 23%, respectively, from Q3's record levels.^{[Motley Fool]} According to another Motley Fool report, analysts had only expected Q4 revenue of $42.5 billion, meaning Micron's guidance blew past consensus.^{[Motley Fool]}

Stock Pullback: Market Sentiment and Cycle Concerns

Despite the stellar results, Micron shares have pulled back from an all-time high of roughly $1,255 hit in June. In a July 6 report, The Motley Fool noted that the stock was down about 22% from that peak.^{[Motley Fool]} The report attributed the decline partly to a chip-sector sell-off on July 2, when cautious comments about AI demand triggered a broad pullback, with Micron falling over 5% that day.^{[Motley Fool]}

Deeper concerns center on the cyclical nature of the memory industry. The Motley Fool pointed out that memory chip prices and profits are highly volatile, and the forces driving record margins could reverse once supply catches up with demand. Micron's 52-week trading range—from roughly $103 to $1,255—underscores the stock's dramatic swings when sentiment shifts.^{[Motley Fool]}

Long-Term Growth Logic: HBM Demand and Strategic Customer Agreements

The core driver of Micron's growth is high-bandwidth memory (HBM) chips for AI servers. According to The Motley Fool, Micron has not only sold out all HBM chips it can produce for the remainder of 2026 but has also pre-sold its entire 2027 capacity.^{[Motley Fool]} CEO Sanjay Mehrotra said on the earnings call that he expects "tight market conditions to persist beyond 2027 due to AI-driven demand and structural supply constraints."^{[Motley Fool]}

To bolster financial stability, Micron has signed strategic customer agreements (SCAs) with 16 clients. According to Seeking Alpha, these agreements run 3 to 5 years, set pricing ranges for each customer, and lock in at least $100 billion in minimum contracted revenue.^{[Seeking Alpha]} Management believes that when these agreements expire, at least half of the company's revenue will be locked in under SCAs.^{[Motley Fool]}

In terms of pricing power, Micron posted strong gains across all segments. According to The Motley Fool, cloud memory revenue grew 78% QoQ with gross margins up 9 points to 83%; data center revenue grew 103% QoQ with margins up 12 points to 87%; and mobile revenue grew 49% QoQ with margins up 9 points to 87%.^{[Motley Fool]}

Valuation and Market Views

Despite the massive share price gains, Micron's valuation looks reasonable against its earnings power. In a July 8 report, The Motley Fool noted that Micron trades at a P/E of roughly 21x, a forward P/E of just 6x, and a five-year PEG ratio of only 0.14.^{[Motley Fool]} Wall Street analysts expect Micron to post EPS of $152.62 in FY2027 (ending August 2027) and $165.94 in FY2028.^{[Motley Fool]}

An analyst on Seeking Alpha upgraded Micron to "Buy" on July 8. The analyst noted that while recent market jitters have pulled the stock down roughly 30% from its highs, "structural AI demand" and "take-or-pay contracts" support a bullish long-term thesis.^{[Seeking Alpha]}

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