Key Takeaways
- Q3 results showed revenue of $41.46 billion, representing a 346% year-over-year surge, while EPS reached $25.11āsurpassing analyst expectations by more than $4.
- Sanjay Mehrotra explained to Jim Cramer that the memory chip supply crunch is structural rather than cyclical, with new manufacturing facilities delayed until 2027ā2028.
- Both HBM3E and HBM4 inventory is completely allocated through 2027, supported by $22 billion in prepaid commitments from major hyperscalers.
- The company has delivered over $1 billion worth of HBM4 products and asserts it leads SK Hynix and Samsung in both DRAM and NAND innovation.
- Shares are currently trading around $970, retreating from a 52-week peak of $1,255, while maintaining an approximate 244% gain year to date.
Micron Technology (MU) shares hover near $970, having pulled back from their 52-week zenith of $1,255 reached on June 25, yet the stock remains elevated with gains of approximately 244% since the start of the year. The recent decline hasn’t altered the fundamental narrativeāsomething CEO Sanjay Mehrotra reinforced during his appearance on Mad Money with Jim Cramer on June 30.
Cramer opened the conversation by addressing the persistent question on every investor’s mind: when will the memory chip shortage finally resolve? Mehrotra provided a straightforward answer.
“The industry requires greenfield manufacturing capacity. That entails constructing entirely new clean room facilities. These facilities demand significant time from groundbreaking to producing the first wafers.”
Micron’s inaugural Idaho fabrication plant will begin wafer production by mid-2027, with volume manufacturing ramping primarily throughout 2028. A second Idaho facility is scheduled to commence operations by late 2028. The New York manufacturing site will follow subsequently. The supply constraint, Mehrotra made clear, will persist for years.
Cramer had previously characterized Micron’s Q3 performance as among the most impressive earnings surprises he’s witnessed. The financial data validates that assessment. Revenue totaled $41.46 billion, marking a 346% increase from the prior year’s $9.30 billion. Non-GAAP earnings per share landed at $25.11, well above the consensus estimate of $20.78. Free cash flow surged to $18.30 billionāestablishing a new company benchmark.
The Q4 outlook is equally remarkable: anticipated revenue of $50 billion, gross margins approaching 86%, and projected EPS of $31.00.
HBM4 Achievement Marks Turning Point
Micron’s entire inventory of HBM3E and HBM4 memory products is fully allocated through the end of calendar 2027, with reservations already extending into 2028. Major cloud infrastructure providers have secured their allocations with $22 billion in upfront cash deposits.
During the quarterly earnings conference call, Mehrotra revealed that the company had already delivered more than $1 billion in HBM4 shipments. This figure represents more than just revenueāit demonstrates technological superiority. HBM4 represents the most sophisticated memory manufacturing process globally, and Micron stands as the sole U.S.-headquartered producer achieving volume production.
When Cramer directly questioned whether Micron had overtaken SK Hynix and Samsung in technological advancement, Mehrotra responded definitively: “In both DRAM and NAND technology domains, we maintain clear technology leadership.” The company’s patent portfolio now encompasses nearly 65,000 patents.
Cramer also highlighted the company’s valuation metrics. Despite the substantial stock appreciation, MU currently trades at less than eight times earnings.
Domestic Manufacturing Expansion
Micron has pledged $200 billion toward U.S.-based manufacturing operations and research and development initiatives, targeting the creation of more than 90,000 employment opportunities. Additionally, the company is investing $300 million in developing a domestic semiconductor workforce through apprenticeship programs, community college partnerships, and university collaborations.
Cramer mentioned Morris Chang’s observation that American chip manufacturing carries 50% higher costs compared to Taiwan. Mehrotra countered this concern by referencing Micron’s operational facility in Manassas, Virginia, which currently manufactures advanced memory solutions for automotive, defense, medical, and aerospace applications.
Regarding consumer markets, Mehrotra acknowledged that intensifying AI data center demand is constraining supply availability for smartphone and PC memory products, consequently driving up consumer device prices. He noted that Micron maintains approximately 40% of its business in consumer segments to ensure portfolio diversification.
MU trades at $970 as of July 2, with fourth-quarter guidance projecting $50 billion in revenue and $31.00 in earnings per share approaching.
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