At today's price, Micron's stock is pricing in about 17.1% annual free-cash-flow growth for the next ten years — roughly 2.2 times its 5-year revenue growth rate of 7.8% a year. But trailing-twelve-month revenue is already up 142% year over year on AI memory demand, and the required growth rate swings from 17.1% to 57.9% depending purely on which recent quarter's cash flow is used as the starting point.
At its current price, MU implies ~17.1% annual FCF growth for the next 10 years, discounted at 10%.
Micron's actual 5-year revenue growth has averaged 7.8% a year; FCF growth over the same span has averaged -9.1% a year.
Required growth vs. historical growth
Required growth from the reverse DCF below. Historical CAGRs from 10-K FY2021-FY2025: revenue $27,705M → $37,378M; FCF $2,438M → $1,668M (dragged negative by the FY2023 trough of -$6,117M). For context not shown on this chart: trailing-twelve-month revenue is up +142% year over year, far outrunning what the current price requires — see the story piece above.
Sensitivity: what if the discount rate moves?
| WACC | Required growth | Note |
|---|---|---|
| 8% | 12.3% | More optimistic discount rate |
| 10% (base case) | 17.1% | Applied somewhat conservatively versus a typical large-cap default |
| 12% | 21.3% | Reflecting semiconductor-sector volatility |
Even at the most conservative discount rate tested (8%), the required growth rate (12.3%) still sits above Micron's 5-year revenue CAGR (7.8%) — though comfortably below the +142% pace the company has already delivered over the trailing twelve months.
What would move this number
Normally this analysis just needs one settled "base FCF" figure. Micron's results have swung so violently over the past year that the answer changes completely depending on which period is used — so all three are shown here.
| FCF basis | Amount | Required growth | Read |
|---|---|---|---|
| FY2025 full year (ended Aug 2025) | $1,668M | 57.9% | Effectively unreachable — already a stale baseline |
| Trailing twelve months (this piece's base case) | $26,170M | 17.1% | Used throughout this analysis |
| Most recent quarter, simply annualized (×4) | $70,250M | 3.7% | If this run-rate is the new normal, the stock looks cheap |
- Using FY2025's full-year FCF ($1,668M) instead of TTM pushes the required growth rate to 57.9% — a figure this analysis treats as effectively unreachable, which is exactly why it isn't the base case.
- Using the most recent quarter's FCF simply annualized ($70,250M) instead of TTM drops the required growth rate to just 3.7%. If Micron's current run-rate holds rather than being a single unusually strong quarter, today's price would look conservative rather than aggressive.
- Micron's own history argues against assuming 10 flat years of high growth — gross margin has swung from over 30% (FY2022) to a FY2023 operating margin of -37%, to today's 84.6% quarterly gross margin. A model assuming a full decade of steady ~17% FCF growth implicitly assumes the memory pricing cycle itself has stopped existing, something with no precedent in this industry's history.
Show your work
Inputs, sources, model assumptions, and the calculation
- Share price$932.86 — stockanalysis.com, Aug 28, 2026 close
- Diluted shares outstanding1.145B — 10-Q Q3 FY2026, 3-month weighted average
- Market cap$1,068.1B — price × diluted shares (calculated)
- Base FCF (trailing twelve months, exception basis — see above)$26,170M — Q4 FY2025 + Q1-Q3 FY2026 operating cash flow ($51,430M) minus capex ($25,260M)
- Net debt-$24,410M (net cash) — as of May 28, 2026: $5,720M total debt minus $30,130M cash and investments
- Enterprise value$1,043.7B — market cap plus net debt
- Discount rate (WACC)10% base case (8%/12% tested)
- Terminal growth rate2.5% — long-run GDP-level assumption
Normalization exception: the standard 3-year-average fallback rule was not applied — Micron's FY2023-FY2025 average FCF is negative (-$1,440M), which would make the model unsolvable. Trailing-twelve-month FCF was used instead; see the FCF-basis table above for the alternative scenarios.
Model: free cash flow is assumed to grow at a constant annual rate g for 10 years, then at a 2.5% terminal rate thereafter, solved by bisection for the value of g that equates present value to today's target enterprise value ($1,043.7B).
Historical CAGR check: 5-yr revenue CAGR = ($37,378M ÷ $27,705M)^(1/4) − 1 = 7.77%. 5-yr FCF CAGR = ($1,668M ÷ $2,438M)^(1/4) − 1 = -9.05%. Trailing-twelve-month revenue growth (TTM vs. FY2025 full year) was approximately +142%, reflecting the AI/HBM demand surge rather than a smooth multi-year trend.
The fine print
- This isn't a fair-value price target — it only shows what the current price already assumes.
- Change the discount rate or, especially here, the FCF base period, and the answer moves dramatically — from 17.1% to 57.9%, as the sensitivity tables above show.
- Micron's results are unusually volatile even by semiconductor standards: a full decade of steady growth at any single rate is a simplification this business's own history (a $5.8B loss just three years ago, an 84.6% margin today) argues against taking literally.
- A reverse DCF shows what the market currently expects — it does not say what the stock is "worth."
- Any investment decision, and its outcome, is your own responsibility.
Frequently asked questions
What growth rate does MU's stock price assume?
At today's price, Micron's stock is pricing in about 17.1% annual free-cash-flow growth for the next ten years, using trailing-twelve-month FCF and a 10% discount rate.
How does that compare to Micron's actual growth?
Micron's 5-year revenue CAGR (FY2021-FY2025) was 7.8% a year, while its 5-year FCF CAGR was actually negative, at -9.1% a year, dragged down by the historic FY2023 downturn. Trailing-twelve-month revenue, however, is running +142% year over year.
What share price was used for this analysis?
This analysis used $932.86, as of the Aug 28, 2026 close.