Should You Buy Micron Stock For Its Cash

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Micron Technology (MU) made free cash flow equal to 7.2% of its market value over the last twelve months, against 4.2% for the median S&P 500 company. A yield that high marks either a business on sale or one the market expects to shrink, and Micron is hard to place because its cash is new: its free cash flow was $59.0 billion over the last twelve months, against $1.67 billion in the twelve months before. What does a yield like that give you as an owner?

What A High Cash Yield Gives A Micron Owner

As a Micron shareholder, you own a share of the free cash the business makes, the cash left after it pays for its operations and its plants, whether or not it is paid out. Cash that stays inside the company still belongs to you, just as your share of its profit does. A high yield means you pay less for each dollar of that cash, which is what makes it attractive.

How Micron Makes Its Cash

Micron sells DRAM and NAND memory chips. Over the last twelve months, its revenue rose 256.3% from a year earlier. Operating margins for the period reached 74.6%, compared with 26.1% the year before. This means most of each sales dollar now flows to operating profit.

Staying in this business is costly. Micron recorded $30.7 billion in capital spending over the last twelve months. This accounted for about a third of the cash brought in by operations, leaving the rest as the free cash behind the yield.

This cash is also recent. During fiscal Q4 2026, the quarter ended September 3, free cash flow reached $32.9 billion. Free cash flow was $72 million a year earlier. That single quarter accounts for more than half of the twelve-month total.

Micron owes far less than it holds. On September 3, the company carried $43.4 billion in cash and short-term investments against $5.18 billion of debt.

Why You Pay So Little For Micron's Cash

You pay little for Micron's cash because the price appears to assume its margins will fall back. On earnings, Micron trades at 9.6 times, against 22.3 for the S&P 500. On sales it trades at 6.2 times, against 3.2 for the index, a mix that fits buyers who expect today's margins to shrink.

Micron's own past gives buyers reason for that doubt. In the twelve months to August 31, 2023, its revenue fell 49.5% from a year earlier. Free cash flow over that period turned negative, at minus $6.12 billion.

Management has said for some time that price increases would eventually slow. On the September 30 call, it said margins should still rise above the first quarter's level through the rest of fiscal 2027, as prices keep rising at a slower pace, and that it expects market conditions to stay tight through 2028. For fiscal Q1 2027, management guided revenue of $60 billion to $63 billion, against $54.2 billion reported for fiscal Q4 2026.

So far, Micron's results and its guide point to a business still growing, not shrinking. Given the cash on its balance sheet, debt is not a worry. For the cash to stay at this level, or keep growing, Micron's margins have to hold up as price increases slow. When the company reports, expected in December 2026, its free cash flow for fiscal Q1 2027 after capital spending will be the figure to watch.

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