On the Back of Improved Prices, Micron Raises Its Sales and Earnings Outlook

Micron Technology Inc. has raised its fiscal fourth-quarter revenue and earnings forecasts, citing stronger-than-expected pricing in one of its key product segments.

‍

For the quarter ending August 28, Micron now expects revenue to come in at $11.2 billion, give or take $100 million. This marks a notable jump from its prior guidance of $10.7 billion, plus or minus $300 million.

‍

The company also upgraded its earnings expectations. Adjusted earnings per share are now projected at $2.85, within a margin of 7 cents, compared to the earlier forecast of $2.50, plus or minus 15 cents. In addition, Micron sees adjusted gross margins at 44.5%, plus or minus 0.5 percentage points, up from the previously anticipated 42%, plus or minus 1 percentage point.

‍

The upbeat revision comes just months after Micron left investors underwhelmed in June with guidance that fell short of bullish expectations. This time, however, management pointed to a healthier pricing environment especially in DRAM (dynamic random access memory) and strong operational execution.

‍

“This revised guidance reflects improved pricing, particularly in DRAM, and strong execution,” the company said in a statement Monday.

‍

A major driver behind Micron’s improved outlook is the surging demand for high-bandwidth memory (HBM) an advanced form of DRAM bundled tightly with processors from Nvidia Corp. to power artificial intelligence workloads.

‍

HBM technology has become essential in AI computing because it allows for rapid data transfer between memory and processors, a critical feature for training and running large-scale AI models. Producing these components is complex, and with supply remaining tight, prices have been moving higher.

‍

Micron’s ability to capitalize on this trend has helped boost its margins and solidify its position in the AI supply chain.

‍

Investors welcomed the news, sending Micron shares up 5.2% in premarket trading on Monday. The stock has already gained 41% year-to-date through last Friday’s close, making it one of the standout performers in the semiconductor sector in 2024.

‍

The rally reflects optimism around the company’s positioning in high-growth markets like AI infrastructure and advanced memory technologies, areas that are expected to remain strong even amid cyclical shifts in the broader chip industry.Looking Ahead

‍

Micron’s improved outlook will likely fuel speculation about just how much runway the company has in the current upcycle. Demand for DRAM and HBM is expected to remain robust as AI adoption accelerates across industries from data centers to autonomous vehicles and beyond.

‍

However, the complexity of producing high-bandwidth memory means supply constraints could persist, potentially extending the favorable pricing environment well into 2025.

‍

Investors and analysts will be watching closely for additional commentary from Micron’s leadership. Chief Business Officer Sumit Sadana is scheduled to speak at the 2025 KeyBanc Technology Conference in Park City, Utah, on Monday at 9 a.m. Mountain Time. His remarks are expected to provide more detail on market trends, customer demand, and Micron’s strategic priorities in the AI-driven memory segment.

‍

Micron’s latest guidance upgrade underscores the company’s ability to benefit from the AI boom and shifting dynamics in the memory market. With improved DRAM pricing, tight supply conditions for high-bandwidth memory, and strong execution, the company is in a favorable position heading into the final quarter of its fiscal year.

‍

If current demand trends hold, Micron could be looking at a period of sustained strength, potentially extending its stock market outperformance into 2025.

‍