Micron Technology Stock: Is Now the Time for Investors to Take Profits or Buy More?
Key Points
Micron Technology has generated massive growth in the past year due to a shortage of memory products.
The shortage will inevitably come to an end, and when it does, Micron's stock may look far more expensive than it does today.
Shares of Micron Technology (NASDAQ:MU) have been volatile in recent months. While some investors are optimistic about the future, given that tech giants continue to spend heavily on artificial intelligence (AI) and related infrastructure, others worry that the memory shortage could end sooner than expected, potentially leading to a near-term sell-off.
Which side is right? Is now the time to buy more, given that Micron's stock is down more than 25% from its peak, or should investors take profits and cash out before it's too late?
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The business is growing fast, but for how much longer?
Micron's business has been on a tear, generating not only strong revenue growth but also massive earnings. It's been able to significantly raise prices due to the memory shortage, resulting in unbelievably high margins.
Consider that in the trailing 12 months, the tech company's operating income has totaled an incredible $99 billion, on revenue of $133 billion. That's a terrific margin of 75%. But at the same time, it's likely unsustainable in the long run for what has historically been a cyclical business.
Just a year ago, for the 12-month period ending Aug. 28, 2025, Micron's revenue was $37.4 billion, and its operating income was $9.8 billion -- a margin of 26%. And that was already higher than normal.
The boom in AI is real, but it also won't last forever. It may take a while for more supply of memory products to come online, but rival companies, seeing Micron's incredible results, will see plenty of incentive to ramp up as quickly as possible. Inevitably, Micron's growth will slow down; it's just a matter of how drastically and how soon.
Investors should consider taking at least some profits out right now
Even for growth investors who remain optimistic that the shortage isn't going to end anytime soon, it may still be a good idea to take some profits. While Micron's stock is up over 1,200% in five years, it can crash as quickly as it has soared if investor sentiment sours and market conditions worsen.
At more than $1 trillion in market cap, there may not be much more upside for the stock, given its already rich valuation. While it may look cheap at a price-to-earnings multiple of just 12, that's due to some incredibly strong results of late. A slowdown in business could quickly make it look far more expensive, which is why Micron may be a riskier stock than it appears to be at first glance.
David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy.