Micron shares rally 12% as anxious investors are relieved by strong results
3min read Micron Technology (MU) delivered strong results in its Q4 earnings report, surpassing both revenue and EPS expectations. The company reported adjusted EPS of $1.18, slightly above the consensus estimate of $1.14, and revenue of $7.75 billion, also beating the estimated $7.635 billion. This performance represents a significant turnaround from the previous year, where the company posted a loss per share. The company’s adjusted gross margin came in at 36.5%, a substantial improvement from the negative 9.1% gross margin recorded in the same quarter last year, and above the consensus estimate of 34.7%.
Looking ahead, Micron provided strong guidance for Q1 FY25, forecasting revenue between $8.5 billion and $8.9 billion, above the consensus estimate of $8.32 billion. The company also guided for Q1 EPS of $1.74, exceeding the consensus estimate of $1.65. Micron’s gross margin is expected to improve further to 39.5% ± 1.0%, indicating continued profitability improvements as the company leverages its market position and technological advancements.
As we noted in our preview, expectations for MU were low as the stock had slipped 40% since hitting all-time highs in late June. There was concern that Micron would follow Broadcom (AVGO) and provide a conservative outlook. MU was able to outpace expectations bot for the quarter and in its outlook which is driving shares higher. the stock is up 12% in after hours and is attempting to break above its 200-sma ($105).
By segment, Micron saw impressive growth across its business units in Q4. The Compute and Networking Business Unit (CNBU) led the way with a 17% quarter-over-quarter (Q/Q) and 152% year-over-year (Y/Y) increase in revenue, reaching $3 billion. The Mobile Business Unit (MBU) grew by 18% Q/Q and 55% Y/Y, totaling $1.9 billion in revenue. The Storage Business Unit (SBU) reported a 24% Q/Q and 127% Y/Y increase in revenue, driven by strong demand for data center SSDs, bringing in $1.7 billion. However, the Embedded Business Unit (EBU) saw a 9% sequential decline, though it still recorded a 36% Y/Y increase, with $1.2 billion in revenue, reflecting the record automotive revenue for fiscal 2024.
Micron’s data center business continues to thrive, reaching record revenue levels in fiscal 2024. The company expects significant growth in data center revenue in fiscal 2025, particularly from High-Bandwidth Memory (HBM), high-capacity DRAM solutions, and data center SSD products. HBM, in particular, remains a critical growth driver for Micron, with the market expected to expand from $4 billion in 2023 to over $25 billion by 2025. Micron has already sold out its HBM production for 2024 and 2025, with pricing locked in, indicating strong demand and solid pricing power.
In the PC market, Micron projects unit volumes to grow in the low single-digit range for calendar 2024, with stronger growth expected in the second half of 2025, driven by AI-enabled PCs and the launch of Windows 12. The company’s innovative LPCAMM2 memory modules and client SSDs position it well to capitalize on this expected growth. In the mobile market, smartphone unit volumes are forecasted to grow in the low-to-mid single-digit percentage range for 2024, with similar growth anticipated in 2025. The increasing adoption of AI-enabled smartphones, particularly among leading Android OEMs, is driving higher DRAM content, with devices moving towards 12GB to 16GB of DRAM.
Micron’s automotive segment also performed well, achieving record revenue for the fourth consecutive year in 2024. The company expects automotive growth to resume in the second half of fiscal 2025, driven by the evolving mix of electric, hybrid, and traditional vehicles. This segment’s performance underscores the broadening demand Micron is experiencing across various markets, beyond just data centers and mobile.
In terms of demand outlook, Micron expects DRAM industry bit demand growth to be in the high-teens percentage range for calendar 2024, with NAND bit demand growth projected in the mid-teens. Both DRAM and NAND demand are expected to remain strong, with healthy supply-demand dynamics contributing to further profitability improvements. Micron anticipates that industry wafer capacity for both DRAM and NAND will stay below 2022 peak levels, supporting favorable market conditions.
Looking forward, Micron plans to increase its capital expenditures significantly in fiscal 2025, with a focus on greenfield fab construction and HBM investments. The company’s capex for fiscal 2024 was $8.1 billion, and it expects this to rise to around the mid-30s percentage range of revenue in fiscal 2025. This strategic investment will help Micron meet the anticipated growth in demand over the coming years.
Overall, Micron’s Q4 performance and forward guidance reflect strong execution and a positive outlook across its key markets. With robust growth across its segments, especially in data center and HBM, Micron is well-positioned to capitalize on the continued demand for advanced memory and storage solutions in the AI-driven landscape.