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Micron is scheduled to report quarterly financial results after the markets close on June 24th, 2026. Micron stock is up over 700% over the last year, and of course I'm happy about that. I've been recommending Micron stock as an excellent buying opportunity for more than a year. So investors are now asking me if they should buy Micron stock before they make this huge investor update.
And I'll answer that question here, and I'll also preview what investors can look out for, can expect from Micron in the upcoming earnings release. & for Micron over the previous year. It's up over 775%. So congratulations to those of you that bought Micron stock and have benefited from these incredible gains.
So when Micron last updated investors on March 18th, 2026, they informed us of the new records they're setting across revenue, gross profit margins, earnings per share, free cash flow, operating profit margins. I could go on and on with all the records that Micron is setting right now. And this is driven by very strong demand from the data centers that are optimized for artificial intelligence as memory is becoming more important in that industry.
And combined with a tight industry supply, which leaves shortages and creating a bidding war and causing prices to surge for the components that Micron is selling. The management team expects these good times to continue and said they expect records to continue in the upcoming quarter. Overall, in the most recently completed quarter, they generated $23.9 billion in revenue, and that was up from $8 billion in the same quarter last year.
So, revenue almost tripled year over year. And that came with a lot better profit margins. Gross profit margins more than doubled to 74.4% and those are at the level of Nvidia-type margins. Similarly, operating income jumped from 1.8 billion in the same quarter last year to 16.1. The operating profit margin of 67.6% ranks Micron among the best of the best in the world in terms of this operating profit margin.
Now, Micron has been investing billions of dollars to build and expand its manufacturing capability and quality. In the second quarter, capital expenditures came in at $5 billion, which if you divide that by revenue, that's a pretty large percentage, almost 25% CapEx to revenue, and Micron has been holding that large CapEx to revenue figure for several quarters now.
Still, even after investing so much in capital expenditure, they were left with $7 billion in free cash flow. I mentioned that the management team is forecasting records in the upcoming quarter. To be more precise, they're forecasting $33.5 billion in revenue. That would be a jump of nearly $10 billion from the second quarter.
So, a nearly 50% increase quarter over quarter. This is remarkable for a company like Micron. Additionally, they're not offering discounts or promotions to achieve those huge growth rates in revenue. In fact, it's the opposite. They're boosting prices because there's a bidding war, there's significant shortages, and they're forecasting their gross profit margin jumps to an almost unheard of 81% in the upcoming quarter.
It's almost unheard of for a company that's selling physical products, a manufacturing company that's selling physical products to generate gross profit margins of 81%, and definitely this is unsustainable for the long term, but it's great as long as it lasts. The gross profit margins of 81% are closer to the gross profit margins that software companies typically achieve, and software companies are not selling any physical product.
That's how remarkable these gross profit margins are coming from Nvidia in recent quarters. I should say Micron, but I'm thinking of Nvidia because previous to Micron, Nvidia was boasting the highest gross profit margins of any company that was selling physical products, but Nvidia outsources the manufacturing, unlike Micron, which has the manufacturing in-house.
It's a vertically integrated semiconductor manufacturing company. So, its cash flow from operations are also soaring, which nearly tripled year-over-year in the 6 months, which ended February 26th. Their cash flow from operations jumped to 20.3 billion, up from 7.2 billion in the 6 months, which ended the same time last year.
So, that left the company with a lot of money to use for other purposes. They spent 11.8 billion dollars for property, plant, and equipment, the manufacturing facilities in the 6 months that ended February 26th, and you can see that's still leaving a lot of cash flow to utilize for other purposes. One of those purposes, Micron chose to pay back some debt at 4.6 billion dollars worth, and they also bought back some stock at 650 million.
And I think that's a telling sign, actually. Micron's share price has surged in the last year, as I showed you. It's almost up almost 800%. The valuation is getting stretched, and you can tell what the management team is thinking about the valuation when you see how they utilized their cash in financing activities.
They could have purchased $4 billion in stock and repaid $650 million in debt. They could have chose to do that, but instead they chose to pay back debt rather than buy back stock. And I think that's a sign that the management team feels the valuation of the company is getting stretched, and they want to utilize they don't want to utilize their cash in buying back stock near these all-time highs when the business is booming, when they're generating record sales, and when the prices of their products and components are at record highs.
I think the management team sees that these levels are unsustainable, and they don't want to be buying back stock in large quantities at these levels. So, they're more measured with the buyback. They're holding dry powder. Of course, if the share price is to experience a big drop, then that can be an opportunity for Micron to buy back stock.
And I think that would be a more prudent use of capital rather than buying back stock at these record high levels. I would prefer the management team reserve that cash, just keep it on the balance sheet, and should there be a pullback in the stock price, then they can go in and deploy a large multi-billion dollar buyback to support the stock so that investors don't fear that, you know, it went up by 800% and it's going to come down by a large percent on the way down very quickly so they can come in, step into the market, buy back stock and support it when shares inevitably have some sort of a pullback, they can jump in and support the stock.
I would prefer they do that rather than buy at these record levels. Speaking of which, when we look at the market multiples for Micron on a forward price to earnings basis, it's trading at 11 and on a forward price to operating cash flow at 12. Now, in and of itself, these levels of valuation for a company are not expensive.
This is about half the price of the average stock in the S&P 500. But, when you think about semiconductor companies and semiconductor manufacturing companies, these are cyclical businesses. They have large ups and downs throughout the cycle and right now Micron is in the peak of its peak, right? The highest record I shared with you, record levels of earnings, record levels of profit, record levels of margins.
So, the denominator is at its peak. So, it makes the price to earnings forward look relatively cheap, but it's because you're looking at earnings per share and you're looking at operating cash flow that are at record highs. If you take that and you adjust it for the average level of earnings, the average level of cash flow throughout a 5-year or 10-year period, the valuation would look a lot more expensive compared to what you're seeing here.
And so, investors would be prudent to understand that this is a cyclical industry and not forecast that these boom times will continue forever. There's always an inevitable pullback pullback in the semiconductor industry. Uh shortages are almost always followed by gluts. And you're seeing that manifest itself by the several new and expansions of manufacturing facilities by nearly all of these companies that are operating in this industry.
If you don't do that, then you open the door for a competitor to jump in and expand their manufacturing and capitalize on the booming market. So, that's the case of this market. It's been this way for decades, and I don't think the current shift is going to change that. Of course, there's a different source of the booming demand, and that's artificial intelligence, and that's lifted the overall market, and I don't think that will reverse into a level where, you know, sales crash over a cycle, but I do think that the rates of increase will slow considerably after next year, and so demand for these products will move towards a replacement cycle rather than entering new markets like they've been benefiting from over the previous year or two.
So, for Micron, and the intrinsic value per share increased to $915. The market price now at $1,054. Now, when I apply a margin of safety here, which I like to do, of 10% sometimes more if it's a more risky situation, and Micron is certainly a more risky situation, a more volatile situation. And when I say risky, what I really mean is variance.
Risk, that's how I measure risk is variance. And I give McDonald's as the opposite of risk because McDonald's sales and profits are roughly flat regardless of the macroeconomic environment. They don't [snorts] experience wild variation or even seasonality, right? Some companies have seasonality where the holiday period has more sales than other periods.
That's variation, and variation is always risky because it's more difficult to manage. It's easier to manage a business that has steady and consistent growth regardless of the macroeconomic environment. It's easier for managers to plan ahead, to have long-term plans, to secure supply, labor, human resources, all of that, right?
So, with Micron, you get a lot of variation, a lot of ups and downs, and that makes the situation more risky. That's what I mean by risk. And so, with Micron, I like to have a higher than 10% margin of safety, and so the market price compared to the intrinsic value is within that margin of safety, so I can say Micron stock looks fairly valued across whether I'm looking at the discounted cash flow or whether I'm looking at the market multiples valuation.
So, overall, I do have Micron stock still rated as a buy, and I last updated it on May 18th, 2026. However, if I was to answer the question, "Should you buy Micron stock before earnings?" Or if I was thinking about buying Micron stock myself, I wouldn't be buying ahead of earnings. I would wait for the earnings results to come out.
I would digest the results, and then I would make a decision after seeing the results and after seeing the price after the results. Because I mentioned it's a risky situation, and then earnings make it even more risky because after an earnings release, a stock price is even more volatile than usual.
So, that's how I would be playing Micron stock. I would be waiting until after earnings to make a decision on if I still want to be buying this. I wouldn't be buying going into earnings because while there is upside remaining, I feel the downside is a lot more than the upside after the stock price has risen by nearly 800% in the last year.
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