Micron surprises investors with strong guidance, sending stock soaring

By Emily Bary

An analyst previously said investors were largely expecting Micron to miss on its outlook. Instead the company's forecast topped expectations.

Micron Technology Inc. impressed with its outlook for the ongoing quarter, and its stock soared in Wednesday's extended session.

At the midpoint of its guidance, the memory-chip company anticipates $8.7 billion in revenue for the fiscal first quarter, though its range extends by $200 million in either direction. Analysts tracked by FactSet had been looking for $8.3 billion, and Micron generated just $4.73 billion in revenue for the same period a year prior.

Micron (MU) also projects $1.74 in adjusted earnings per share at the midpoint, while analysts were modeling $1.52.

Sentiment around Micron has been dour recently, and a Citi analyst wrote ahead of the report that many investors had come to expect below-consensus guidance.

Shares jumped 14.8% in the extended session Wednesday. The stock had fallen 32% in the three months through Wednesday's close.

Other semiconductor stocks were rising as well, with fellow memory peer Western Digital Corp. (WDC) seeing a 4.6% boost in its shares. Chip-equipment stocks Applied Materials Inc. (AMAT) and KLA Corp. (KLAC) were ahead more than 3%. Nvidia Corp.'s stock (NVDA) was up fractionally.

See also: Nvidia's stock has room to run - but analysts see more upside for 6 other chip makers

For the fiscal fourth quarter, the company posted $7.75 billion in revenue, up from $6.81 billion the prior quarter and $4.01 billion a year before. The FactSet consensus was for $7.65 billion.

Micron Chief Executive Sanjay Mehrotra said in a release that artificial-intelligence demand "drove a strong ramp of our data-center DRAM products and our industry-leading high-bandwidth memory." That refers to dynamic random-access memory.

The other part of the business is NAND memory, which hit a record high in revenue for the fiscal fourth quarter.

The supply-demand balance is crucial for the memory market as it affects industry pricing. On the supply front, Mehrotra said on the earnings call that "industry conditions will help drive the improvement in profitability and [return on investments] that are needed to enable the investments required to support future growth," according to a FactSet transcript.

Chief Financial Officer Mark Murphy added on the call that high-bandwidth memory "of course is creating supply constraints in the marketplace as share bits increase," which is partly why Micron executives "still see that the supply and demand environment is healthy through the year." High-bandwidth memory has applications in artificial intelligence.

The company's guidance calls for revenue to hit a new record in the ongoing quarter before the company goes on to post "a substantial revenue record with significantly improved profitability in fiscal 2025," according to Mehrotra's statement.

Micron logged quarterly net income of $887 million, or 79 cents a share, in the latest period. A year earlier, it posted a $1.43 billion net loss.

On an adjusted basis, Micron saw $1.18 in earnings per share, ahead of the $1.11 consensus view.

Read: Nvidia is expected to grow quickly through 2026. These companies may grow faster.

-Emily Bary

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09-25-24 2054ET

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