Micron Technology, Inc. is set to report its fourth-quarter fiscal 2024 results on September 25 after market close. The company is expected to show strong financial performance.
This is due to an improving demand-supply environment for memory chips and rising investments in artificial intelligence (AI). Micron’s advanced products are anticipated to capitalize on the increasing demand for high-performance memory and storage solutions. The rapid growth of the global AI market has led to a surge in investment.
This is driving demand for advanced technologies and infrastructure. AI applications require immense computational power and fast data processing. As a result, memory and storage solutions like those produced by Micron have become critical components in powering AI systems.
Micron’s core products, such as DRAM and NAND flash memory, are pivotal in enabling the speed and capacity needed for these AI tasks. The demand for these components has translated into significant growth for the company. The Zacks Consensus Estimate projects fourth-quarter DRAM revenues at $5.26 billion, a 91% increase year over year.
NAND revenues are expected to surge 91.5% to $2.31 billion. Micron’s strong partnerships with industry leaders like NVIDIA Corporation and Advanced Micro Devices, Inc. (AMD) have likely driven its growth.
As these companies expand their AI capabilities, they rely heavily on Micron’s memory solutions to power their latest advancements. This has resulted in a surge of orders for Micron, fueling its top-line growth. NVIDIA depends on Micron’s high-performance memory solutions to enhance the capabilities of its AI chips.
Micron’s Q4 earnings preview
In February 2024, Micron began mass production of its HBM3E high-bandwidth memory for NVIDIA’s newest AI chip. This memory technology is expected to be a game-changer for NVIDIA’s forthcoming H200 GPUs.
Micron’s partnership with AMD has also proved to be highly beneficial. AMD requires robust memory solutions to unlock the full potential of its high-performance processors and GPUs. Micron’s cutting-edge memory technologies have been essential in supporting AMD’s AI workloads, leading to more orders and higher revenues.
Rising AI investments and Micron’s strategic partnerships with tech giants have positioned the company for continued success. These factors are likely to have aided MU’s overall performance in the to-be-reported quarter. However, concerns over a softening DRAM market have dampened expectations.
Analyst Joseph Moore suggests that this lowered outlook might actually work in favor of the stock. He believes that if Micron can guide above a low buyside bar for November, credibly argue that their HBM3e ramp is tracking, and maintain their overall optimism, the stock could be oversold. Yet, Moore offers some caution.
While he praises the quality of Micron’s HBM3e memory, he warns that an expected oversupply of HBM might not be enough to drive the bull case. He argues that outside of HBM, the broader DRAM market remains sluggish with excess inventory everywhere. Moore believes Micron stock still appears overpriced by traditional metrics.
He acknowledges that backward-looking measures shouldn’t define the story, but they do set a clear baseline. He sees a strong environment that trumps prior peaks as the only case for the stock to move higher, which he considers unlikely. Accordingly, Moore rates Micron shares as Equal-weight with a $100 price target, reflecting a 12-month upside of approximately 6%.
However, apart from one bear, all 24 other analysts covering MU rate it a Buy, providing the stock with a Strong Buy consensus rating. The average price target is a bullish $151.54, suggesting shares will climb approximately 61% higher in the year ahead.
