Micron Earnings On Deck – What To Expect

Micron Technology (NASDAQ: MU) is poised to release its fiscal Q3 2025 earnings after market close today, with markets eagerly anticipating the results. The stock has rallied yesterday in the lead up to the print, gaining 4.78% on the day.

Bullish momentum has been building in recent months, with Micron adding 46% YTD, aided in no small part by strong demand for its HBM chips crucial for AI applications.

Analysts currently estimate earnings per share (EPS) of $1.61 for the current quarter and $2.03 for the next quarter (August 2025). The projected revenue of $8.85 billion represents a significant improvement on the $6.81billion year-over-year figure, reflecting a substantial growth rate of 30%.

This growth is largely attributed to the unrelenting demand for HBM, particularly from companies like NVIDIA and AMD, who rely on these chips for their AI graphics processing units (GPUs).

Micron's HBM has been selected for NVIDIA's GB200 and GB300 Blackwell systems, underscoring the company's strategic partnerships and technological prowess in the AI hardware space. This strong demand environment, coupled with Micron's proactive reorganization to better align with the AI sector, has driven positive market sentiment and contributed to the stock's recent gains.

Micron's recent financial performance has been nothing short of stellar. The company's Q1 fiscal 2025 earnings showcased a record revenue of $8.71 billion, a significant leap from the $4.73 billion recorded in the same period last year. This surge translated into a GAAP net income of $1.87 billion, or $1.67 per diluted share.

The data center revenue, a key indicator of AI-driven demand, experienced explosive growth, exceeding 40% sequentially and a staggering 400% year-over-year. The positive trend continued into Q2 fiscal 2025, with revenues reaching $8.05 billion, a 38% increase compared to the previous year's quarter. GAAP net income remained strong at $1.58 billion, or $1.41 per diluted share.

A notable achievement was Micron's HBM revenue surpassing the $1 billion mark, accompanied by record data center DRAM revenue, further solidifying its position in the AI market.

Looking to analysts, and there is a huge gulf here between the bulls and the bears. A low target of $60, less than 50% of the current trading level, set against a high of $172, reflecting more than 30% upside is not overly common. The average price target of $126.95 is however positioned near the current trading level ~$127.59. What are the key differences in the viewpoints?

Bull Case:

• Dominance in HBM Market: Micron's leadership in the high-bandwidth memory (HBM) market, crucial for AI applications, positions it for continued revenue growth as AI adoption accelerates.
• Strong Financial Performance: Recent earnings reports have demonstrated robust revenue growth and profitability, showcasing the company's ability to capitalize on market opportunities.
• Strategic Partnerships: Collaborations with industry leaders like NVIDIA and AMD solidify Micron's position in the AI hardware ecosystem and ensure consistent demand for its products.
• Favorable Market Conditions: Macroeconomic and geopolitical developments are creating a more favorable investment environment for the semiconductor industry, benefiting Micron.

What The Bears See

The bears may point to the market being overly optimistic about Micron's near-term prospects. While the AI boom is undeniable, the semiconductor industry is notoriously cyclical. The current surge in demand could be followed by a period of oversupply, potentially leading to price erosion and impacting Micron's profitability.

Furthermore, the intense competition in the memory and storage market should not be underestimated. Companies like Samsung and SK Hynix are aggressively vying for market share, and any technological breakthrough or strategic move by these competitors could disrupt Micron's dominance. The company's reliance on a few key customers in the AI space also presents a risk. Should NVIDIA or AMD decide to diversify their HBM suppliers or develop their own in-house solutions, Micron's revenue stream could be significantly impacted. 

The upcoming earnings report will provide crucial insights into the company's trajectory and determine whether it can sustain its momentum in the face of these challenges. Whether Micron can effectively navigate these complexities and capitalize on the AI opportunity remains to be seen, but its recent performance suggests that it is well-positioned to thrive in the years to come.