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The Zacks Consensus Estimate for third-quarter non-GAAP earnings is pegged at 50 cents per share, which implies a robust improvement from the year-ago quarter’s loss of $1.43. Meanwhile, the consensus mark for revenues is pegged at $6.7 billion, which suggests a 78.6% increase from the year-earlier period’s revenues of $3.75 billion.
Micron stock has made a remarkable run year to date, with its share price soaring 65.7%, outperforming the Zacks Computer and Technology sector’s growth of 24.1%. The uptick can be attributed to Micron’s back-to-back quarters of impressive financial performance and an improving demand-supply environment for memory chips.
As Micron prepares to announce its third-quarter earnings, let’s explore the reasons to consider the stock as a promising portfolio pick now.
YTD Price Performance
Image Source: Zacks Investment Research
Impressive Performance and Prospects
Micron has been recovering from the financial difficulties experienced in late 2022 and early 2023. This improvement is evident from the company's financial results in the last few quarters. Its non-GAAP earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 69.6%.
In the last reported results for the second quarter of fiscal 2024, Micron’s top and bottom lines both surpassed the consensus mark and witnessed significant year-over-year improvement as well.
The Zacks Consensus Estimate for fiscal 2025 revenues is pegged at $37.3 billion, indicating year-over-year growth of more than 51%. The consensus estimate for fiscal 2025 earnings is pegged at $7.81, which suggests a more than eightfold increase.
Strong Industry Trends
Micron’s memory chips are essential for GPU-enabled artificial intelligence (AI) servers, which are in high demand at present. The integration of generative AI and large language models in data centers is driving the need for advanced memory solutions. As memory is crucial for AI operations, this trend positions Micron to benefit significantly.
The memory chip industry has seen a better balance between supply and demand over the past few quarters. Previously, Micron faced challenges due to customer inventory adjustments across various end markets. However, recent quarters have shown improvement in this balance, leading to higher pricing for Micron’s Dynamic Random Access Memory (“DRAM”) and NAND products. This positive shift is expected to continue, enhancing Micron's financial performance in the near term.
A Diversified Product Range Aids in Winning New Deals
Micron offers an extensive lineup of products tailored for PCs, servers and the smartphone sector, covering both DRAM and NAND offerings. DRAM chips serve as crucial components in PCs and servers, while NAND flash chips are vital for smartphones and SSDs.
Micron’s diversified product portfolio and sustained focus on bringing in innovative products help it win new deals. Its recently launched next-generation GDDR7 graphics memory, which features the highest bit density in the industry, is being tested by Advanced Micro Devices (AMD - Free Report) and Cadence Design Systems (CDNS - Free Report) .
AMD will leverage GDDR7 graphics memory to build more responsive and realistic games. Cadence will continue to stick to its long history of building IPs with MU. This time, CDNS will use GDDR7 to test and validate GDDR7 PHY IP.
Micron is supplying its high-bandwidth memory, namely HBM3E, for NVIDIA's (NVDA - Free Report) latest AI chip. NVIDIA is expected to leverage the HBM3E to develop its H200 graphic processing units that will replace NVDA’s existing H100 chip. Micron earlier revealed that its HBM chips had been sold out for 2024, and a majority of 2025 supply had already been allocated.
Final Thoughts
In conclusion, Micron Technology is a must-have in any tech portfolio. Its critical role in the tech ecosystem and unwavering commitment to innovation make it a compelling investment. As technological advancements drive the demand for high-performance memory and storage solutions, Micron is well-positioned to reap substantial rewards.
Micron's financial health adds to its investment appeal. The company boasts substantial cash reserves, providing a buffer against market volatility. It ended the second quarter of fiscal 2024 with cash and cash equivalents of $9.7 billion and total liquidity of $12.2 billion. This strong financial position allows Micron to invest in research and development, fueling further innovation and growth.
MU has a Zacks Rank #2 (Buy) and a Growth Score of B at present. Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 (Strong Buy) or 2 and a Growth Score of A or B offer solid investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.
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Should Micron (MU) be in Your Portfolio Before Q3 Earnings?
Micron Technology (MU - Free Report) is scheduled to report third-quarter fiscal 2024 results after market close on Jun 26.
The Zacks Consensus Estimate for third-quarter non-GAAP earnings is pegged at 50 cents per share, which implies a robust improvement from the year-ago quarter’s loss of $1.43. Meanwhile, the consensus mark for revenues is pegged at $6.7 billion, which suggests a 78.6% increase from the year-earlier period’s revenues of $3.75 billion.
Micron stock has made a remarkable run year to date, with its share price soaring 65.7%, outperforming the Zacks Computer and Technology sector’s growth of 24.1%. The uptick can be attributed to Micron’s back-to-back quarters of impressive financial performance and an improving demand-supply environment for memory chips.
As Micron prepares to announce its third-quarter earnings, let’s explore the reasons to consider the stock as a promising portfolio pick now.
YTD Price Performance
Image Source: Zacks Investment Research
Impressive Performance and Prospects
Micron has been recovering from the financial difficulties experienced in late 2022 and early 2023. This improvement is evident from the company's financial results in the last few quarters. Its non-GAAP earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 69.6%.
In the last reported results for the second quarter of fiscal 2024, Micron’s top and bottom lines both surpassed the consensus mark and witnessed significant year-over-year improvement as well.
The Zacks Consensus Estimate for fiscal 2025 revenues is pegged at $37.3 billion, indicating year-over-year growth of more than 51%. The consensus estimate for fiscal 2025 earnings is pegged at $7.81, which suggests a more than eightfold increase.
Strong Industry Trends
Micron’s memory chips are essential for GPU-enabled artificial intelligence (AI) servers, which are in high demand at present. The integration of generative AI and large language models in data centers is driving the need for advanced memory solutions. As memory is crucial for AI operations, this trend positions Micron to benefit significantly.
The memory chip industry has seen a better balance between supply and demand over the past few quarters. Previously, Micron faced challenges due to customer inventory adjustments across various end markets. However, recent quarters have shown improvement in this balance, leading to higher pricing for Micron’s Dynamic Random Access Memory (“DRAM”) and NAND products. This positive shift is expected to continue, enhancing Micron's financial performance in the near term.
A Diversified Product Range Aids in Winning New Deals
Micron offers an extensive lineup of products tailored for PCs, servers and the smartphone sector, covering both DRAM and NAND offerings. DRAM chips serve as crucial components in PCs and servers, while NAND flash chips are vital for smartphones and SSDs.
Micron’s diversified product portfolio and sustained focus on bringing in innovative products help it win new deals. Its recently launched next-generation GDDR7 graphics memory, which features the highest bit density in the industry, is being tested by Advanced Micro Devices (AMD - Free Report) and Cadence Design Systems (CDNS - Free Report) .
AMD will leverage GDDR7 graphics memory to build more responsive and realistic games. Cadence will continue to stick to its long history of building IPs with MU. This time, CDNS will use GDDR7 to test and validate GDDR7 PHY IP.
Micron is supplying its high-bandwidth memory, namely HBM3E, for NVIDIA's (NVDA - Free Report) latest AI chip. NVIDIA is expected to leverage the HBM3E to develop its H200 graphic processing units that will replace NVDA’s existing H100 chip. Micron earlier revealed that its HBM chips had been sold out for 2024, and a majority of 2025 supply had already been allocated.
Final Thoughts
In conclusion, Micron Technology is a must-have in any tech portfolio. Its critical role in the tech ecosystem and unwavering commitment to innovation make it a compelling investment. As technological advancements drive the demand for high-performance memory and storage solutions, Micron is well-positioned to reap substantial rewards.
Micron's financial health adds to its investment appeal. The company boasts substantial cash reserves, providing a buffer against market volatility. It ended the second quarter of fiscal 2024 with cash and cash equivalents of $9.7 billion and total liquidity of $12.2 billion. This strong financial position allows Micron to invest in research and development, fueling further innovation and growth.
MU has a Zacks Rank #2 (Buy) and a Growth Score of B at present. Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 (Strong Buy) or 2 and a Growth Score of A or B offer solid investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.