To The Moon

$Micron Technology(MU)$ is scheduled to report its fiscal Q3 2025 earnings on 25 June 2025, after market close.

Revenue: Micron projects fiscal Q3 revenues to be around $8.8 billion (with a +/- $200 million range).

Earnings Per Share (EPS): Adjusted earnings per share (EPS) are anticipated to be around $1.57 (+/- 10 cents).

Micron Technology (MU) Last Positive Earnings Saw Share Price Increased By 18.67%

Micron had a positive earnings call on 20 March 2025 which saw its share price increased by 18.67%.

The earnings call reflects a strong performance in DRAM, particularly in the data center segment, with record revenues and advancements in technology. However, challenges in the NAND market and pressure on gross margins indicate some areas of concern. Despite these challenges, the company's outlook remains positive with expected record revenues in the coming quarter.

Micron Technology (MU) Guidance

During Micron's Second Quarter 2025 Financial Call, the company provided positive financial guidance and key performance metrics. Micron achieved record revenues in data center DRAM, with HBM revenue growing over 50% sequentially, surpassing $1 billion for the quarter. The company continues to hold its leading position in DRAM technology with the launch of its 1-gamma node, achieving a 20% power reduction, 15% better performance, and over 30% improvement in bit density compared to its 1-beta DRAM.

The outlook for fiscal Q3 is promising, with expected revenue of $8.8 billion and EPS of $1.57, driven by shipment growth in both DRAM and NAND. Micron anticipates maintaining its DRAM and NAND market share in calendar 2025, with DRAM bit demand growth projected in the mid- to high teens percentage range. Additionally, the company is on track to increase its HBM market share to align with its overall DRAM supply share by calendar Q4 2025, with strong demand expected to continue into 2026.

Key Expectations for Fiscal Q3 2025

Strong Revenue Growth: Micron projects fiscal Q3 revenues to be around $8.8 billion (with a +/- $200 million range). The Zacks Consensus Estimate and analyst projections are largely in line with this, around $8.84 billion to $8.86 billion, representing significant year-over-year growth of approximately 29.7% to 30%. This growth is primarily attributed to the surging demand for memory chips, especially DRAM, driven by AI server adoption.

HBM revenue grew more than 50% sequentially, reaching over $1 billion in quarterly revenue, with shipments ahead of plans.

Significant EPS Improvement: Adjusted earnings per share (EPS) are anticipated to be around $1.57 (+/- 10 cents), with the Zacks Consensus Estimate at $1.59 and some analysts projecting up to $1.61. This indicates a substantial year-over-year improvement of over 150%, reflecting both revenue expansion and operational leverage.

DRAM as a Key Driver: DRAM revenues are expected to be a major contributor, with analysts forecasting around $7 billion, marking an impressive 49.2% year-over-year growth. This is fueled by improved pricing and strong demand from AI servers and data centers.

Data center DRAM revenue reached a new record in fiscal Q2, supported by strong demand for high-capacity DRAM modules and LPDRAM. Launched 1-gamma node with significant improvements: 20% lower power, 15% better performance, and over 30% improvement in bit density compared to 1-beta DRAM.

NAND Challenges: While DRAM is strong, NAND revenues are expected to see a decrease of around 15.6% year-over-year, with a consensus mark of $1.74 billion. Pricing pressure in NAND products and startup costs at new production facilities are likely factors.

NAND revenue decreased by 17% sequentially, with prices declining in the high-teens percentage range. NAND industry faced underutilization and structural capacity reductions, impacting the company's gross margins negatively.

Gross Margin Pressure: Micron predicts a non-GAAP gross margin of 36.5% (+/- 100 basis points) for Q3, which would be a slight contraction from the prior quarter. This is attributed to the lower-margin NAND products and ongoing startup costs associated with new facilities, despite strong overall demand.

Expected record revenue in fiscal Q3 driven by shipment growth in both DRAM and NAND, with projected revenue of $8.8 billion. Consolidated gross margin for fiscal Q2 was 37.9%, down 160 basis points sequentially, primarily due to lower NAND pricing and mix shift to consumer-oriented products.

Factors Influencing Performance

AI Server Demand: The most significant driver is the increasing adoption of GPU-enabled AI servers. As data center operators expand infrastructure for generative AI and large language models, the demand for high-performance memory chips, particularly High-Bandwidth Memory (HBM) and advanced DRAM, has surged. Micron's strategic ramp-up in HBM has been paying off, with HBM sales surpassing $1 billion in the previous quarter.

Improved DRAM Pricing: Market conditions for DRAM chips have improved over the past year, leading to better pricing. This favorable pricing environment is expected to continue in the latter half of the year due to the scarcity of advanced DRAM supplies for AI servers.

Projected fiscal 2025 operating expenses to increase by over 10%, reflecting planned increases to support high-value products, including HBM.

Diversification and Strategic Investments: Micron has been diversifying its revenue base by focusing on resilient verticals like automotive and enterprise IT, reducing reliance on the more volatile consumer electronics market. The company also announced a significant $200 billion investment plan in the U.S. for memory manufacturing and R&D, aiming to bolster its competitive position and secure domestic supply.

Broke ground on an HBM advanced packaging facility in Singapore and completed a construction milestone for a new DRAM fab in Idaho.

Macroeconomic Headwinds and Geopolitical Risks: While the outlook is largely positive, inflationary pressures and macroeconomic uncertainties could dampen consumer spending, potentially affecting demand in markets like smartphones and PCs. Additionally, Micron's reliance on China and ongoing U.S.-China trade tensions remain critical risk factors.

Fiscal Q2 revenue was $8.1 billion, up 38% year-over-year. DRAM revenue increased by 47% year-over-year.

Micron Technology (MU) Price Target

Based on 34 analysts from Tiger Brokers offering 12 month price targets for Micron in the last 3 months. The average price target is $124.32 with a high forecast of $172.00 and a low forecast of $60.00. The average price target represents a 1.83% change from the last price of $122.08.

Analysts are generally bullish on Micron, with a "Strong Buy" consensus rating. Many have raised their price targets, citing the ongoing strength in data center and AI-driven DRAM demand.

Technical Analysis - Exponential Moving Average (EMA)

Analysts believe that while Q3 may not mark a major inflection point for all products, pricing for both DRAM and NAND is expected to improve in the coming quarters.

The performance of MU share price have been on the upside since it came out of the negative momentum in mid-May, and it had some range-bound trades towards end of May, but the bulls have since taken control and have been building a very nice uptrend, and the daily uptrend continuation looks like it will continue into its earnings and beyond.

Summary

Micron is expected to deliver strong fiscal Q3 2025 results, primarily driven by the robust demand for its memory products in the AI server market and favorable DRAM pricing.

While NAND segment performance and gross margin could face some pressure from startup costs and pricing, the overall trajectory for the company appears positive, with analysts anticipating continued growth and improved profitability for fiscal 2025.

Appreciate if you could share your thoughts in the comment section whether you think Micron would continue to show continued growth with strong momentum of its share price continuing.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.