Micron Technology’s stock has skyrocketed, defying analyst expectations, after the company reported impressive results and provided an optimistic outlook. Despite more than a dozen Wall Street analysts lowering their price targets in the weeks leading up to its earnings report, Micron’s stock has surged over 25% this year. The chipmaker’s strong performance can be attributed to the growing demand for artificial intelligence (AI) infrastructure, which has led to record data center revenue.
One area of emerging growth for Micron is its high-bandwidth memory (HBM) chips, which are used in AI chipsets to reduce power consumption and improve performance. The company’s newest HBM3E chip is used in Nvidia’s H200 processors and will be used in its new Blackwell chipsets as well. Micron expects HBM revenue to reach “multiple billions of dollars” in fiscal year 2025, with the total addressable market (TAM) for HBM growing from $4 billion in 2023 to over $25 billion in 2025.
Micron’s fiscal third-quarter results were impressive, with revenue surging 93% to $7.8 billion. Dynamic random-access memory (DRAM) revenue rose 93% to $5.3 billion, while NAND revenue increased by 96% to $2.4 billion. Compute and Networking revenue soared 152% to $3 billion, while Storage revenue jumped 127% to $1.7 billion.
Looking ahead, Micron guided for fiscal Q1 revenue to be between $8.5 billion and $8.9 billion, with gross margins between 38.5% and 40.5%. The company expects adjusted earnings per share (EPS) to be between $1.66 and $1.82, well ahead of analyst expectations.
Micron’s strong growth prospects, combined with its cheap valuation, make it an attractive investment opportunity. The company’s forward price-to-earnings (P/E) multiple is just over 12, based on analyst estimates of $9.05 for the current fiscal year. While there are concerns about DRAM oversupply and pricing, the growing demand for AI infrastructure and Micron’s emerging growth in HBM chips make it a stock worth holding onto. However, investors should continue to monitor comments on DRAM pricing and supply before making a buying decision.
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