TLDR
- Micron reported Q2 adjusted EPS of $1.56, beating analyst estimates of $1.43
- Revenue reached $8.05 billion, exceeding expectations of $7.90 billion and up 38% year-over-year
- Data center revenue tripled with high-bandwidth memory (HBM) crossing $1 billion milestone
- Q3 guidance was strong with projected revenue of $8.8 billion, above consensus of $8.5 billion
- Stock rose approximately 5% in after-hours trading following the earnings announcement
Micron Technology reported better-than-expected earnings for its fiscal second quarter on Thursday, driven by robust demand for memory chips used in artificial intelligence applications. The company’s stock jumped about 5% in after-hours trading following the announcement.
For the quarter ended February 27, Micron posted adjusted earnings per share of $1.56, surpassing Wall Street’s estimate of $1.43. This represented a significant improvement from the 42 cents per share earned in the same period last year.
Revenue reached $8.05 billion, exceeding analysts’ expectations of $7.90 billion. This marked a 38% increase compared to the $5.82 billion generated in the year-earlier period.
The strong performance was particularly evident in Micron’s data center business, where revenue tripled year-over-year. The company’s high-bandwidth memory (HBM) product line crossed the $1 billion revenue milestone during the quarter.
NAND storage chips showed better-than-anticipated results. While growing more slowly than DRAM memory chips, the deceleration wasn’t as severe as analysts had feared.
Looking Ahead
Micron provided an optimistic outlook for its fiscal third quarter. The company forecasted adjusted earnings of $1.57 per share at the midpoint of its guidance range, above analysts’ expectations of $1.52.
Revenue guidance was similarly strong at $8.8 billion at the midpoint, representing a 51% year-over-year increase. This exceeded the consensus estimate of $8.5 billion.
“We expect record quarterly revenue in fiscal Q3, with DRAM and Nand demand growth in both data center and consumer-oriented markets, and we are on track for record revenue and improved profitability in fiscal 2025,” said CEO Sanjay Mehrotra in the earnings release.
The positive results stand in contrast to Micron’s previous earnings report in December. Following that announcement, the stock had plummeted 16% due to concerns about a potential downturn in the memory market cycle.
Micron makes two main types of memory chips. DRAM chips serve as the main memory in computers, servers and other devices, working closely with central processing units. Nand flash provides longer-term data storage.
AI Impact on Business Cycle
Memory chip manufacturers typically experience steep revenue cycles, with periods of growth followed by sharp declines. Investors are constantly trying to gauge where Micron stands in the current cycle.
Some analysts believe this cycle may be different due to sustained AI investment. Memory is a key component in AI servers, and analysts expect DRAM sales growth to average 31% over the next six quarters.
This growth is partially offset by more modest performance in storage, which is projected to average 12% growth according to analyst estimates.
Micron stock has often appeared undervalued near the top of its business cycle. It currently trades at 11.5 times earnings estimates for the next 12 months, compared to 23.8 for the PHLX Semiconductor index and 20.3 for the S&P 500.
The strong quarterly results and forward guidance suggest that AI demand for high-bandwidth memory may indeed be providing a more sustainable growth driver for Micron than in typical cycles.
Based in Boise, Idaho, Micron ranks second out of 10 stocks in the Computer-Data Storage industry group, according to IBD Stock Checkup. The company has an IBD Composite Rating of 75 out of 99.
The memory chip maker’s fiscal Q2 results have given investors more confidence in the bull case for Micron stock, though future performance still depends heavily on continued growth in AI investment.
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