Micron Expertise MU) has been one of many elite performers within the semiconductor house over the previous yr, fueled by surging demand for synthetic intelligence (AI) infrastructure and high-bandwidth reminiscence (HBM) merchandise.
With the memory-chip big scheduled to report outcomes for its fiscal third-quarter on Wednesday, June 24, buyers are questioning whether or not they need to nonetheless purchase Micron’s inventory after its newest surge.
Main as much as its Q3 report, Micron inventory has surged greater than 20% this month and has gained 300% year-to-date, with a monstrous 1,700% return over the past three years.
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AI Demand Continues to Gasoline Micron’s Unprecedented Progress
Rising as one of many largest beneficiaries of the AI growth, Micron’s HBM merchandise have turn out to be crucial parts in AI accelerators and information middle GPUs. That is attributed to strong demand from hyperscale cloud suppliers and AI infrastructure clients similar to Microsoft MSFT), Meta Platforms META), Alphabet GOOGL), and Amazon AMZN).
Administration has repeatedly highlighted that demand for HBM stays exceptionally robust, with manufacturing already bought out for the remainder of the yr and a good portion of 2027 manufacturing is already below buyer agreements. As AI adoption accelerates throughout industries, Micron is benefiting from a good supply-demand setting that has supported each income development and pricing tendencies.
Most significantly, Micron’s information middle enterprise has turn out to be a development engine that has offset volatility in additional conventional finish markets similar to PCs and smartphones.
Analysts Anticipate One other Quarter of Distinctive Progress
Based mostly on Zacks estimates, Micron’s Q3 gross sales are thought to have surged 276% to $34.98 billion in comparison with $9.3 billion a yr in the past.
Extra astonishing, Micron’s quarterly earnings are anticipated to climb practically 1,000% to $20.98 per share from Q3 EPS of $1.91 within the comparative quarter ($2.18 billion Non-GAAP web earnings).
Past the headline numbers, analysts will deal with:
HBM income development and manufacturing capability
Knowledge middle reminiscence demand tendencies
DRAM and NAND pricing circumstances
Gross margin growth
Fiscal fourth-quarter steerage
The Zacks ESP
It’s additionally noteworthy that the Zacks ESP (Anticipated Shock Prediction) signifies Micron may surpass its lofty earnings expectations, with the Most Correct and up to date estimate amongst Wall Road having Q3 EPS slated at $22.17 and practically 6% above the underlying Zacks Consensus of $20.98.
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Notably, Micron has exceeded the Zacks Consensus for 12 consecutive quarters, with a powerful common earnings shock of 21.74% in its final 4 quarterly reviews.
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Monitoring Micron’s P/E Valuation
Regardless of its robust run, Micron’s valuation stays comparatively cheap in comparison with many AI-related semiconductor shares.
Though buyers proceed to assign premium valuations to firms straight uncovered to AI infrastructure spending, Micron’s 18X ahead earnings a number of is a noticeable low cost to many high-profile semiconductor friends and continues to be beneath the benchmark S&P 500’s common of roughly 22X.
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Backside Line
Micron enters its fiscal third-quarter report with robust momentum, supported by booming AI-related demand, favorable reminiscence market circumstances, and rising publicity to high-margin HBM merchandise. Whereas earnings volatility is all the time potential, the corporate’s long-term development story stays compelling as AI infrastructure spending continues to broaden.
For buyers in search of publicity to one of many key enablers of the AI revolution, Micron stays a inventory value watching forward of earnings. Including to the bullish case, MU is presently sporting a Zacks Rank #1 (Sturdy Purchase), reflecting optimistic earnings estimate revisions and enhancing enterprise fundamentals.
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This text initially printed on Zacks Funding Analysis (zacks.com).
The views and opinions expressed herein are the views and opinions of the creator and don’t essentially mirror these of Nasdaq, Inc.
