Micron Technology (NASDAQ: MU) just turned in one of the most impressive quarterly reports you’ll ever see, although the stock was unable to gain any traction following its results. The stock was already up a whopping 350% over the past year going into the report, and it looked like a classic sell-the-news type of event.
Let’s take a closer look at the memory maker’s results and prospects to see whether the stock can regain its momentum.
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Micron is benefiting from a surge in memory prices, as both DRAM (dynamic random-access memory) and NAND (flash) memory remain in short supply due to the artificial intelligence (AI) infrastructure build-out. Nearly 80% of Micron’s revenue is derived from DRAM, with the remainder largely from NAND.
The company is one of the three major DRAM manufacturers. The DRAM market is currently being driven by high demand for high-bandwidth memory (HBM), which is packaged with AI chips, such as graphics processing units (GPUs), to optimize performance. Adding to the supply-demand issues is the fact that HBM requires upwards of 3 times the wafer capacity of ordinary DRAM.
Micron expects both the DRAM and NAND markets to remain capacity-constrained beyond this calendar year. It is currently expanding its manufacturing capacity to meet long-term demand trends. As such, it raised its capital expenditure (capex) budget to $25 billion this fiscal year. Management said that as AI evolves, it expects AI infrastructure to become even more memory-intensive.
Overall, for its fiscal second quarter, Micron reported that its revenue increased from $8.05 billion to $23.86 billion, exceeding the $20.07 billion consensus, as compiled by LSEG. DRAM revenue more than tripled to $18.8 billion, while NAND revenue was up by more than 2.5 times to $5 billion. Other revenue rose 27% to $95 million.
By segment, cloud memory revenue surged 163% to $7.75 billion, while core data center revenue climbed 211% to $5.69 billion. Mobile revenue jumped 245% to $7.71 billion, while automotive & embedded revenue rose 162% to $2.71 billion.
Gross margins ballooned to 74.4%, up from just 36.8% a year ago and 56% in the fiscal first quarter.
Adjusted earnings per share (EPS) came in at $12.20 compared to $1.56 a year ago. That was well ahead of the adjusted EPS of $9.31 that analysts were expecting.
