Micron Technology Poised for Significant Profit Growth Driven by High-Value Products and AI-Led Market Expansion
Cantor Fitzgerald analyst C.J. Muse has reaffirmed Micron Technology’s Overweight rating, accompanied by a price target of $150. This revised target reflects a multiple of 14 times Muse’s estimated earnings per share for calendar year 2025, up from the previous 13 times.
Following an investor call with Micron, Muse highlighted the company’s strong performance in the data center segment, driven by both cloud and enterprise demand. Server growth is expected to reach mid-single-digit percentages, fueled by artificial intelligence and traditional non-AI servers. While assumptions for PCs and smartphones appear conservative, Muse anticipates a recovery in the May quarter and beyond.
The analyst noted that Micron’s shift towards higher-value and higher-margin solutions, including high-capacity server DRAM DIMMs, LPDDR5, and eSSD, will contribute significantly to the company’s revenue growth in fiscal 2025. These products are expected to achieve multi-billion-dollar revenue and provide a higher profitability floor due to their structurally higher gross margins.
Muse also emphasized Micron’s technological leadership in HBM3E 12-high products, which boast superior power efficiency compared to competitors. The company expects volume shipments of these products to commence in early 2025, with significant revenue contributions in the second half of the year.
The analyst expressed comfort in Micron’s reassurance that the increased capital expenditures in fiscal 2025 will not result in new bit output until 2026 at the earliest, alleviating concerns about bit oversupply. Additionally, Muse believes that the embargo on HBM sales into mainland China will likely benefit Micron, as it will create incremental demand for DRAM bits from China.
Muse projects Micron’s first-quarter revenue to reach $8.70 billion, with earnings per share of $1.74. Despite the stock’s current decline, Muse remains optimistic about Micron’s prospects, driven by its high-margin products and AI-driven market expansion.
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