Micron Technology, Inc. (NASDAQ:MU) had a fantastic six-week run. During a time when tech stocks have suffered painful volatility, MU stock ran straight up. Remarkably enough, Micron stock surged as much as 50% since the beginning of February.

That’s more than even most bulls expected. I last wrote on Micron in February, suggesting that the company would hit at least $50/share. At the time, I noted that, “Micron raised its earnings estimates, but the market hasn’t priced it in yet.”

Well, that didn’t take long. Here we are, just weeks later, with Micron stock now at $55. And it hit $60 before the most recent earnings report put some cold water on the trade.

Was said earnings report just a bump in the road, or has Micron stock seen its top? It’s a tricky question. While MU stock has traded down sharply on Friday following the earnings report, it appears investors simply had excessive expectations. Nasty overall market conditions aren’t helping MU stock out either.

That said, the numbers were quite good, and some analysts have actually lifted their price targets further following the earnings release. Let’s dive into the numbers and see if the market’s reaction makes sense.

Was the Earnings Report so Bad?

On social media, there was immediate confusion following Micron’s earnings report. All the results looked good, but MU stock traded lower and, as of yet, hasn’t bounced back. What’s going on?

For the quarter, Micron reported revenues of $7.35 billion, up a tremendous 58% since the same period last year. Analysts had forecast $7.28 billion, so Micron beat by a healthy $70 million. And for earnings per share, analysts had pegged the company at $2.74. Micron comfortably exceeded that, actually reporting $2.82 of EPS.

However, while these results comfortably beat estimates, they apparently failed to live up to the hype that Micron had generated heading into the report. Remember, MU stock soared 50% heading into earnings and picked up numerous price target bumps over the past two months.

So the first signs of weakness in the NAND market stung. Ambrish Srivastava of BMO Capital Markets explains: “Trade NAND revenues and margins both declined in the quarter. ASP came in well below what we were modeling for.”

We’ll get to more analyst opinions in a second. It’s worth remembering that the DRAM market is still booming – a fact that Micron reiterated with this quarterly release and conference call. And the stock is so cheap on an earnings basis that it hardly needs much more growth to justify its current share price.

Analysts React

Like the market itself, analysts have had mixed opinion on Micron stock. Citigroup’s Chris Daney spooked the market with a downgrade from buy to neutral. Daney was a long-time bull on MU stock who enjoyed the stock’s epic run over the past year. But now, Daney suggests that, he “had some concern on Micron stock for a few months” and is particularly nervous that NAND demand may be “rolling over”, as BMO also warned.

Other analysts rejected Daney’s negativity. Cowen raised its target for Micron stock from $55 to $65 following the earnings report. Mizuho Securities bumped its Micron stock price target from $66 to $70.

And Micron bull Stifel took their target up from an already ambitious $85/share up to $95 following the earnings report. Given the drop in MU stock, that $95 price now represents close to 75% upside from today’s price.

The center of the debate revolves around whether or not the recent surge in demand for memory is a short-term blip, or the new normal. Micron is reacting as if there will be more demand for its memory products going forward. Micron is building new facilities in Japan and Singapore to produce both more DRAM and NAND going forward.

If memory demand is rolling over, as Citi’s analyst suggests, these factories may be money poorly spent. That’s what MU stock bears are banking on in any case.

Micron Stock Verdict

According to Micron CEO Sanjay Mehrotra, this time won’t be a repeat of past memory cycles. Previously, PC market demand drove the cycle, but with so many new applications, memory demand should be more sturdy in the future. Mehrotra said that:

“The dealer market today is very different from the PC-dominated market of the past. This market now supports a healthy demand environment with several secular demand drivers that I have discussed earlier. More specifically, memory is making possible applications such as AI and VR, and enabling new cloud-based business models which deliver a fundamental value far in excess of a price per bit.”

The CEO went on to forecast 20% demand growth in 2018, which is strong indeed. That wouldn’t be as fast as 2017’s growth – but really, who was expecting another year that great?

Here’s the simple fact. Micron stock is now at 9x trailing earnings, and around 6.5x forward earnings. Even assuming the bears are right and the cycle will reassert itself at some point, it seems premature to bail on Micron stock here.

Micron’s management reassured the market during its conference call that demand will be strong through this year, and their capital expenditure plans indicate that they see things remaining favorable for at least a couple of years.

While Micron can’t keep growing at 2017’s torrid clip forever, it is still growing for now. And with the PE ratio already in the single digits and heading lower, it seems like this dip will find buyers quickly enough.

At the time of this writing, the author held no positions in any of the aforementioned securities. You can reach him on Twitter at @irbezek.