The tech sector has been in a slump lately, and Micron Technology (NASDAQ: MU) is one of the few bright spots, thanks to surging demand for artificial intelligence (AI) memory. It's up 48% on the year and an even more impressive 311% over the last year, as of March 20.

After those kinds of returns, it'd be reasonable to assume that Micron is now overvalued. But when you review the numbers, Micron stock looks severely undervalued.

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Micron recently reported fantastic results for the second quarter of its 2026 fiscal year, which ended Feb. 26, 2026. Revenue jumped to $23.9 billion, a 75% increase from the previous quarter and a 196% increase year over year. It delivered revenue increases in all four of its business units, while increasing gross margin to 74%, up from 56% in the previous quarter.

Not only did Micron significantly increase revenue, but it also retained a larger share of that money, boosting its free cash flow.

Even with Micron's share price rising, it trades at 20 times trailing earnings. The tech-heavy Nasdaq-100 index, in comparison, trades at an average of 35 times earnings, indicating that Micron is still more affordably priced than many other tech stocks.

The price-to-earnings (P/E) ratio is also backward-looking, which means it may not work well for valuing rapidly growing companies. With these companies, it can be better to take a forward-looking approach. In Micron's case, the memory company trades at just 7 times forward earnings. Nvidia, the market's largest company, trades at 21 times forward earnings.

A low P/E ratio or forward P/E ratio doesn't guarantee a winning investment. Micron could underperform if memory demand slows, although that doesn't seem likely at present. Still, with its recent results and cheap valuation, Micron is well worth considering for tech investors.

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Lyle Daly has positions in Nvidia. The Motley Fool has positions in and recommends Micron Technology and Nvidia. The Motley Fool has a disclosure policy.

Micron Stock Is Up 311% Over the Last Year. Here's Why It's Still a Cheap Buy. was originally published by The Motley Fool