What
We
Thought
of
Micron
Technology’s
Earnings
We
raise
our
fair
value
estimate
for
Micron
Technology
to
US$110
per
share
from
US$80,
behind
a
higher
medium-term
growth
and
margin
forecast.
We
now
expect
significant
growth
through
fiscal
2026
for
Micron,
driven
primarily
by
higher
expectations
for
its
dynamic
random-access
memory,
or
DRAM,
business.
We
believe
high-bandwidth
memory,
or
HBM,
will
augment
growth,
but
we
also
expect
standard
DRAM
to
benefit
from
strong
pricing
over
the
next
few
years.
Investment
in
artificial
intelligence
will
meaningfully
contribute
to
our
forecast
across
both
HBM
and
standard
DRAM.
We
see
demand
outpacing
supply
through
2025,
supporting
high
prices
that
should
drive
strong
revenue.
We
also
expect
gross
margins
to
benefit
from
strong
pricing
and
a
rising
mix
of
HBM
revenue,
which
is
already
margin-accretive.
Micron’s
fiscal
third-quarter
results
aligned
with
our
updated
forecast,
and
the
firm
continues
to
rebound
meaningfully
from
a
cyclical
trough
in
fiscal
2023.
Shares
dropped
as
much
as
7%
after
hours
upon
results,
which
we
attribute
to
the
market
wanting
even
better
guidance
from
AI.
We
see
shares
as
overvalued,
even
at
our
new
valuation.
In
the
long
term,
we
continue
to
see
Micron
as
cyclical,
and
we
expect
softer
results
after
our
forecast
for
increasingly
normal
strength
through
fiscal
2026.
May-quarter
revenue
rose
82%
year
over
year
and
17%
sequentially
to
US$6.8
billion,
as
Micron
continues
to
recover
revenue
from
a
sharp
cyclical
downturn
in
fiscal
2023.
Both
DRAM
and
NAND
revenue
rose
in
line
with
firm
revenue
growth.
We
expect
sequential
growth
to
continue
for
DRAM
and
NAND
through
fiscal
2025,
and
for
Micron
to
reach
record
revenue
in
fiscal
2025
and
2026.
Micron’s
gross
margin
is
improving
in
line
with
revenue,
and
we
similarly
expect
margin
expansion
through
fiscal
2026.
The
author
or
authors
do
not
own
shares
in
any
securities
mentioned
in
this
article.
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