A stock that has gained nearly 280% this year normally shouldn't look like a value investment. Yet, Micron Technology Inc. (NASDAQ: MU) has managed to become both.
Micron now represents 22.9% of the iShares MSCI USA Value Factor ETF (BATS: VLUE), making it by far the fund's largest position.
A fund built to hold cheap stocks has made a memory chipmaker its biggest bet.
Overall, 642 ETFs own Micron shares. None of them gives the stock a bigger weight.
The next closest, the XFUNDS Memory Income ETF (NYSE: DRMY), holds 16.5%.
Micron Weighs More Than Five Times The Next Holding
Cisco Systems Inc. (NASDAQ: CSA), the fund's second-largest holding, accounts for 4.25% of the portfolio. Micron's weight is more than five times that of Cisco.
How A Chip Stock Became A Value Fund's Top Holding
The ETF tracks the MSCI USA Enhanced Value Index. The index scores each company on three measures: forward earnings, book value and operating cash flow.
It compares each company only with peers in the same sector. It then weights each stock by its market value multiplied by that score.
Finally, the index keeps each sector's weight equal to its weight in the broad U.S. market. That rule explains the 23%.
Micron currently screens the lowest forward multiple among the members of the Technology Select Sector SPDR Fund (NYSE: XLK).
What Bank Of America Is Watching Before Earnings
Bank of America's analyst Vivek Arya reiterated a Buy rating on Micron on Sept. 22, with a $1,550 price target. That implies about 41% upside from the $1,096 close that day.
Arya said the key number next week is not pricing.
Micron does not usually guide on future memory prices. Instead, he is watching whether management signals that gross margin can stay in the mid-80% range through fiscal 2027.
That margin, in his view, would support consensus fiscal 2027 earnings of $150 to $200 per share. That would be more than double the current year. It would also leave the stock near 7 times forward earnings, below the roughly 10 times Micron has historically sustained.
Arya also flagged share buybacks. Restrictions tied to Micron's CHIPS Act grants could lift from Dec. 9.
“We are especially looking forward to a potential resurgence in buybacks that can resume from Dec. 9 once restrictions from CHIPS Act grants are lifted. MU’s trailing-year FCF could be sufficient to retire 8-10% of its stock,” Arya said.
However, the analyst linked the low multiple to the same cycle fear.
He said memory stocks have kept losing valuation because investors worry new capacity will arrive in the second half of 2027.
