Micron (NASDAQ:MU) has been drawing plaudits across the Street after the memory giant’s FQ3 results and outlook blew past expectations, highlighting the company’s strong positioning in the AI space.
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Revenue, gross margins, and EPS all surpassed the high end of the guide. In fact, revenue hit a quarterly record of $9.3 billion, amounting to a 36.6% year-over-year increase while beating the analysts’ forecast by $450 million. The revenue beat was powered by ongoing strength in data center markets and solid sequential growth across consumer-facing segments, with the company delivering record-high DRAM revenue, including nearly 50% quarter-over-quarter growth in HBM sales. Meanwhile, adj. gross margins rose to 39%, up from 37.9% in the previous quarter, and the end result was adj. EPS of $1.91, trumping analyst expectations by $0.30.
Building on that momentum, Micron complemented these strong results with an equally upbeat outlook. For FQ4, revenue is expected to hit between $10.4 billion and $11 billion, with the midpoint of $10.7 billion topping the $9.9 billion forecast. Gross margins are set to expand to 42%, while the company guided for adj. EPS in the $2.35 to $2.65 range – with the $2.50 midpoint comfortably above the $2.05 consensus.
That bullish guidance rests on continued strength in DRAM, supported by stronger pricing, a favorable product mix, and ongoing cost efficiencies. While the forecast does not factor in potential tariff impacts, management remains confident about the demand backdrop and anticipates finishing fiscal 2025 with tight DRAM inventories and significantly reduced NAND levels.
Moreover, Micron’s longer-term growth prospects look promising, underpinned by structural tailwinds from AI infrastructure investments. Over the medium term, DRAM bit demand is projected to grow at a mid-teens CAGR (compound annual growth rate), with Micron maintaining discipline by strategically keeping non-HBM DRAM bit supply growth below overall industry demand.
Scanning the results, Rosenblatt’s Kevin Cassidy, an analyst who ranks amongst the top 2% of Wall Street stock pros, applauds an excellent showing by the company.
“The combination of AI applications driving DRAM demand and Micron’s leading power efficiency drove revenue, gross margin, operating margins and profits well above Street expectations,” the 5-star analyst said. “Outlook is for more of the same. With DRAM wafer capacity expansion over 18 months away, we see this cycle driving Micron’s income model to all-time highs. We continue recommending MU shares for the relatively low valuation, 12x fP/E, strong balance sheet, expanding margins and earnings leverage.”
With that in mind, Cassidy increased his price target on MU shares from $172 to a Street-high of $200, suggesting gains of 60% are in the cards for the next year. Cassidy’s rating stays a Buy. (To watch Cassidy’s track record, click here)
20 other analysts also take a favorable view of Micron’s prospects while an additional 2 Holds can’t detract from a Strong Buy consensus rating. The forecast calls for 12-month returns of 25%, considering the average price target clocks in at $156.26. (See MU stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.