Micron Earnings Preview: Key Expectations and Storylines

Micron Technology (MU) is set to release its fiscal Q1 2025 earnings report after the market closes on Wednesday, December 18. The company has guided revenue to range between $8.5 billion and $8.9 billion, with a midpoint of $8.7 billion, aligning closely with Wall Street’s consensus estimate of $8.71 billion. This would represent a remarkable year-over-year growth of 84.3%. Adjusted EPS is projected at $1.74, a significant turnaround from a loss in the prior-year period, with analysts slightly more optimistic at $1.77.

Micron’s management has expressed confidence in its outlook, citing strong demand in data center and AI-driven markets. However, near-term headwinds remain in the form of softer DRAM and NAND pricing, particularly in the PC and smartphone markets. The company expects these inventory issues to normalize by spring 2025, setting the stage for stronger performance in the latter half of the fiscal year. Gross margin for Q1 is anticipated to rise to approximately 39.5%, reflecting a favorable product mix and pricing trends.

High-bandwidth memory (HBM) remains a focal point for Micron, with management projecting the total addressable market (TAM) for HBM to exceed $25 billion by 2025, up from a prior estimate of $20 billion. Micron is well-positioned to capture a substantial share of this market, having secured orders through 2025. Analysts estimate the company could achieve a 16-20% HBM market share in 2025, potentially driving $4-5 billion in revenue. The demand for HBM is being fueled by generative AI and advanced data center applications, underscoring its strategic importance.

Analysts remain optimistic about Micron’s long-term prospects, with many reiterating buy ratings and raising price targets ahead of the earnings release. Despite some concerns about near-term softness in DRAM pricing and potential competition, the company’s focus on advanced technology nodes and capacity expansion has positioned it favorably for sustained growth. The recent $1.6 billion federal grant under the CHIPS Act to support domestic semiconductor manufacturing further bolsters Micron’s growth initiatives, particularly in DRAM and NAND production.

Investors will be watching for updates on Micron’s guidance for fiscal Q2, which could reflect seasonal weakness but also signal improving fundamentals in the second half of the year. Additionally, commentary on DRAM recovery, the pace of HBM adoption, and the resolution of inventory challenges in the PC and handset markets will be closely scrutinized. With its strong positioning in the AI and data center memory markets, Micron’s Q1 earnings report is poised to be a significant catalyst for the stock.

Micron Technology reported robust fourth-quarter earnings, beating analyst expectations with adjusted EPS of $1.18 versus the consensus of $1.14 and revenue of $7.75 billion, exceeding the $7.635 billion estimate. Gross margins improved significantly to 36.5% from a negative margin a year ago, supported by favorable pricing and a strong product mix. The company also provided optimistic guidance for Q1 FY2025, projecting revenue between $8.5 billion and $8.9 billion, above the consensus estimate of $8.32 billion, and EPS guidance of $1.74, ahead of the $1.65 forecast. Shares surged by nearly 10% in after-hours trading, reflecting investor confidence in Micron’s execution and outlook.

One of the standout highlights was Micron’s commentary on high-bandwidth memory (HBM), a key growth driver tied to AI applications. Management raised the total addressable market (TAM) for HBM to over $25 billion, up from a previous estimate of $20 billion, and emphasized that HBM capacity is sold out through 2025. Micron is targeting a significant share of this expanding market, aiming for approximately 16% in 2025, with the potential to exceed 20%. This positions Micron as a major player in the AI-driven memory market alongside competitors like SK Hynix.

While NAND performance remained under pressure, Micron reported over $1 billion in enterprise SSD revenues, marking significant progress in its NAND portfolio. However, softness in smartphone and PC demand continued to weigh on NAND and broader memory markets. Despite these challenges, the company expects inventories for PC and smartphone customers to normalize by spring 2025, supporting a more balanced supply-demand environment in the coming quarters.

Micron’s strong Q4 and constructive FY2025 commentary also provided a boost to the broader semiconductor sector. Peers such as Lam Research, Western Digital, and Applied Materials saw their stocks gain momentum after the earnings release, reflecting the ripple effect of Micron’s performance on market sentiment for memory and AI-focused semiconductors. Analysts have echoed this optimism, with multiple firms raising their price targets on Micron, citing its leadership in HBM and improving margins as key catalysts for sustained growth.

Looking ahead, investors will focus on Micron’s continued progress in ramping HBM production and executing on its DRAM strategy, as well as potential improvements in the NAND market. While some seasonal softness is expected in Q2, the company’s solid guidance for Q1, combined with favorable long-term dynamics in AI and data center memory, positions Micron as a top pick in the semiconductor space. As analysts project further upside in FY2025 and beyond, Micron’s shares are likely to remain a focal point for growth-oriented investors.