Earnings Digest | Micron Soars, Sparking Semi Rally!
$Micron Technology(MU)$ released its fourth-quarter fiscal year 2024 report yesterday, corresponding to the three-month results ending August 29 this year. The earnings far exceeded expectations, and the stock price soared 15% after hours.
1.Profit and Margin
Looking at revenue, Micron's fourth-quarter revenue was $7.75 billion, a whopping 93% increase year-on-year, exceeding analysts' expectations of $7.66 billion. The gross margin of 35.3% also surpassed forecasts of 34.7%.
In terms of earnings guidance, Micron expects revenue in Q1 2025 to be around $8.7 billion, an 84% increase year-on-year. Quarterly revenue will hit a record high, significantly exceeding analysts' expectations of $8.3 billion.
The expected gross margin is around 38.5%, also exceeding analysts' expectations of 37.6%.
Micron's success isn't a surprise. High-Bandwidth Memory (HBM) demand is skyrocketing, squeezing traditional memory production and driving prices up. On the other hand, the rebound in PC and smartphone sales has already fueled a storage boom.
From a volume-price perspective, DRAM revenue hit $5.3 billion, up 14% quarter-on-quarter; NAND flash revenue was $2.4 billion, a 15% increase quarter-on-quarter, driven by higher shipments and ASP increases.
Segments Performance
Micron's Datacenter business set records in FY2024 and is poised for even greater growth in FY2025, thanks to HBM leadership, forecasting billions in revenue from high-capacity DRAM 5, LP 5, and datacenter SSDs.
The HBM market is projected to explode from $4 billion in 2016 to over $25 billion by 2025, with its DRAM share climbing from 1.5% to 6% by 2025.
AI PCs are flooding the market, and Windows 10's end of support in 2025 could spur a PC replacement cycle, boosting Micron's PC shipments.
Smartphones, too, are benefiting from AI-driven upgrades, with new models packing 12-16GB DRAM, up from last year's flagship average of 8GB.
The Automotive sector adds to Micron's tailwind, as EVs' entertainment and autonomous features boost storage chip sales.
Future Outlook
Looking ahead, Micron anticipates 2025 DRAM and NAND shipments to remain robust, and plans to increase capex to ~35% of revenue to meet advanced product demand.
CEO Sanjay Mehrotra sums it up perfectly:
"Micron's Q4 revenue surged 93% YoY, fueled by robust AI demand for datacenter DRAM and industry-leading HBM. Our NAND revenue hit a record, topping $1 billion for the first time, led by datacenter SSD sales. We enter FY2025 in our strongest competitive position ever, projecting record Q1 and FY2025 revenues with significantly improved profitability."
This Micron surge hints at a new semiconductor rally. HBM, a core component in $NVIDIA Corp(NVDA)$ 's AI GPUs, underscores the enduring AI demand, reassuring markets. Micron's capital expenditure boost amidst this AI and traditional demand resurgence is a major plus for semiconductor equipment suppliers.
In short, the semiconductor boom is far from over. Those who jump off early may regret it!
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
