Micron Technologies posted a remarkable 93.3% year-over-year revenue increase for its fiscal fourth quarter of 2024, reaching $7.75 billion and exceeding analyst expectations by $100 million. The boost came largely from its high-bandwidth memory (HBM) chips, which are specifically designed for AI applications like computer vision, natural language processing (NLP), and machine learning (ML), significantly aiding AI-related training and inference tasks.
The company raised its guidance for the first quarter of fiscal 2025, with CEO Sanjay Mehrotra expressing optimism, noting that Micron is entering 2025 in its strongest competitive position to date and expects to generate record revenues.
Micron’s earnings defied expectations from several analysts who had downgraded the stock or lowered price targets ahead of the report, causing shares to dip as low as $84.12 on September 12, 2024. Despite this, analysts at MarketBeat had highlighted reasons to buy during the 44% drop, anticipating a rebound in the stock’s performance.
Micron’s robust AI-driven earnings report also lifted shares of other memory chip makers, including Western Digital and Seagate Technology.
The fiscal Q4 report showed that Micron had finally begun to reap the benefits of the AI boom, following in the footsteps of companies like NVIDIA and Oracle. Previous earnings reports had been underwhelming, raising concerns that AI growth alone might not offset challenges in Micron’s other sectors, such as falling DRAM prices and sluggish demand in the PC and smartphone markets. However, Micron’s latest earnings delivered a clear win, with earnings per share (EPS) of $1.18, beating estimates by 7 cents, and non-GAAP gross margins improving to 36.5%.
AI and data center demand were central to the company’s performance, with strong sales in Micron’s data center DRAM products and industry-leading HBM chips. The company’s recent acquisition of two factories in Taiwan aims to expand capacity for HBM chips, which are crucial for AI applications. Mehrotra further emphasized that fiscal 2025 is expected to see record revenues and significantly enhanced profitability.
Micron also reported record revenue in its NAND division, driven by strong data center and solid-state drive (SSD) sales, surpassing $1 billion in quarterly sales for the first time.
Looking ahead to fiscal Q1 2025, Micron raised its revenue forecast to between $8.50 billion and $8.90 billion, exceeding the $8.27 billion consensus estimate. The company also increased its EPS guidance to a range of $1.66 to $1.82, above the analyst forecast of $1.52, with non-GAAP gross margins expected around 39.5%.
Micron sees ongoing demand growth for both traditional and AI servers, with AI momentum remaining strong into 2025. The company’s 128GB DIMMs are being deployed in AI servers for training and inference, fueling demand from enterprise AI and cloud server markets.
From a technical perspective, Micron’s stock recently completed a cup pattern, with resistance at $110.39. The post-earnings rally filled the gap to $110.58, and the stock is expected to either consolidate or pull back to form a handle, which could lead to a breakout. Key support levels are $110.39, $104.48, $98.52, and $89.97.
Micron’s average analyst price target stands at $146.04, with the highest target at $225. The stock currently holds 25 Buy ratings, one Hold, and one Sell rating. Given the significant post-earnings price jump, investors may seek to buy on pullbacks using cash-secured puts or a wheel strategy for income, in addition to the company’s 0.41% dividend yield.
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