Is Micron No Longer a Cyclical Business? | MU Stock Deep Dive Part 2

Parkev Tatevosian, CFA•Oct 4, 2026

Summary

Parkev argues that Micron is currently at a valuation crossroads, with management attempting to convince investors that the company is no longer a traditional cyclical business. Management points to 26 strategic customer agreements, which are expected to account for over 35% of revenue by 2030, as a source of stability. Parkev states that these 'take-or-pay' contracts allow for more efficient manufacturing and R&D planning, yet the market remains skeptical, pricing the stock at a forward P/E ratio of approximately 5.8.

Parkev states that despite Micron's trailing earnings per share (EPS) rising to $74.21—vastly exceeding the previous 2019 peak of $11—investors are wary that this performance is nearing a cyclical top. Parkev argues that while the AI-driven datacenter build-out will likely drive earnings higher for the next 12 to 36 months, a cooling-off period is inevitable once the initial infrastructure phase concludes. Furthermore, Parkev notes that significant new production capacity is slated to come online between 2027 and 2030, which could lead to the price compression typical of cyclical shifts.

Micron (MU): Parkev argues that the stock remains a cyclical play despite management's efforts to brand it as more predictable through long-term contracts. Parkev states that earnings are likely to continue their upward trajectory in the near term as the datacenter catalyst has not yet peaked. Parkev notes that if the market were to eventually accept the non-cyclical narrative, the P/E multiple could expand to 10, 15, or 20, which would lead to a significant increase in the stock price.

Mentioned Stocks

Sentiment: HOLD

Reasoning: Parkev argues that while Micron is currently seeing massive earnings growth due to AI demand, the stock is still valued as a cyclical business with a low forward P/E of 5.8. Parkev states that although the peak may be 12-36 months away, the business will eventually face a downturn once the datacenter build-out moderates and new production capacity arrives between 2027 and 2030. Parkev notes that the stock price would increase significantly if the market's P/E multiple expanded, but he remains convinced of the stock's inherent cyclicality.

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