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Micron Slips Ahead of Earnings: Is the AI Memory Demand Priced In?
After years of tracking semiconductor cycles, I've seen few stories as compelling as Micron Technology's transformation in 2025.
The company, a key player in the Zacks Computer - Integrated Systems industry, has delivered one of the year's most impressive performances, with shares rising more than 180% year-to-date through mid-December. This surge has taken Micron from early-year levels in the $80-$90 range to recent highs near $265, reflecting a profound re-rating as investors recognize its pivotal role in the artificial intelligence infrastructure buildout.
Image Source: StockCharts
Capitalizing on AI Memory Demand Amid a Stellar 2025
Micron manufactures and markets high-performance memory and storage technologies, including Dynamic Random Access Memory (DRAM), NAND flash memory, NOR Flash, 3D XPoint memory and other technologies. Its solutions are used in leading-edge computing, consumer, networking and mobile products. The company’s mission is to be the most efficient and innovative global provider of semiconductor memory solutions.
The stock’s rise has been driven primarily by explosive demand for high-bandwidth memory (HBM), a specialized DRAM variant essential for training and running large AI models. Micron reported that its HBM supply for calendar 2025 sold out earlier in the year, with revenue from this segment contributing significantly to record results.
Micron reported revenue of around $37 billion in fiscal 2025—up nearly 49% year-over-year—and a dramatic turnaround to profitability with earnings exceeding $8 billion.
Data center revenue improved substantially, fueled by partnerships with leaders like Nvidia, whose Blackwell and upcoming platforms rely heavily on Micron's HBM3E and forthcoming HBM4 products. Micron's investments in advanced nodes are paying off, enabling higher densities, better power efficiency, and premium pricing that have expanded gross margins substantially.
Yet, after touching all-time highs in early December, shares have pulled back around 10% ahead of the upcoming earnings release. This correction likely stems from typical post-rally profit-taking, heightened expectations ahead of the fiscal first-quarter 2026 earnings release, along with broader market rotation amid macroeconomic uncertainties.
Despite the retreat, Micron carries a Zacks Rank #1 (Strong Buy), our highest rating, supported by consistent upward earnings estimate revisions. Consensus for the upcoming Q1 FY2026 release points to revenue of approximately $12.7 billion (up 46% year-over-year) and adjusted EPS near $3.91—more than doubling from the prior year. Analysts have bumped up their EPS estimates by 4.27% in the past 60 days.
Image Source: Zacks Investment
The pullback has improved the risk/reward profile of the stock. Micron's competitive positioning in HBM—where it has gained share against rivals like SK Hynix and Samsung—combined with new facilities coming online supports a multi-year growth narrative rather than a short-cycle peak. Broader industry forecasts project the AI memory market expanding meaningfully, with HBM alone potentially doubling in size annually through the decade.
What the Zacks Model Reveals
The Zacks Earnings ESP (Expected Surprise Prediction) seeks to find companies that have recently witnessed positive earnings estimate revision activity. This more recent information can be a better predictor for future earnings and can give investors a leg up during earnings season.
The technique has proven to be quite useful for finding positive earnings surprises. In fact, when combining a Zacks Rank #3 or better with a positive Earnings ESP, stocks produced a positive surprise 70% of the time according to our 10-year back test.
Micron (MU - Free Report) is a Zacks Rank #1 (Strong Buy) and boasts a +3.14% Earnings ESP. Another beat may be in the cards when the company reports results after the close on Wednesday. Micron has exceeded the earnings mark in each of the last four quarters, sporting an average beat of 9.4% over that timeframe.
Bottom Line
Risks remain, including potential delays in AI spending, competition intensifying supply, and macroeconomic headwinds affecting capex. However, Micron's fortified balance sheet, strategic focus on high-margin data center products, and proven execution provide a solid foundation. In my experience, dips in strong secular themes like this often present opportunities for patient investors.
Micron's journey in 2025 exemplifies how innovation can redefine a mature company in the AI era. With a Zacks Rank #1 (Strong Buy) and robust estimates underscoring continued momentum, the current levels offer an attractive point to consider building or adding to positions in this standout stock.
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Micron Slips Ahead of Earnings: Is the AI Memory Demand Priced In?
After years of tracking semiconductor cycles, I've seen few stories as compelling as Micron Technology's transformation in 2025.
The company, a key player in the Zacks Computer - Integrated Systems industry, has delivered one of the year's most impressive performances, with shares rising more than 180% year-to-date through mid-December. This surge has taken Micron from early-year levels in the $80-$90 range to recent highs near $265, reflecting a profound re-rating as investors recognize its pivotal role in the artificial intelligence infrastructure buildout.
Image Source: StockCharts
Capitalizing on AI Memory Demand Amid a Stellar 2025
Micron manufactures and markets high-performance memory and storage technologies, including Dynamic Random Access Memory (DRAM), NAND flash memory, NOR Flash, 3D XPoint memory and other technologies. Its solutions are used in leading-edge computing, consumer, networking and mobile products. The company’s mission is to be the most efficient and innovative global provider of semiconductor memory solutions.
The stock’s rise has been driven primarily by explosive demand for high-bandwidth memory (HBM), a specialized DRAM variant essential for training and running large AI models. Micron reported that its HBM supply for calendar 2025 sold out earlier in the year, with revenue from this segment contributing significantly to record results.
Micron reported revenue of around $37 billion in fiscal 2025—up nearly 49% year-over-year—and a dramatic turnaround to profitability with earnings exceeding $8 billion.
Data center revenue improved substantially, fueled by partnerships with leaders like Nvidia, whose Blackwell and upcoming platforms rely heavily on Micron's HBM3E and forthcoming HBM4 products. Micron's investments in advanced nodes are paying off, enabling higher densities, better power efficiency, and premium pricing that have expanded gross margins substantially.
Yet, after touching all-time highs in early December, shares have pulled back around 10% ahead of the upcoming earnings release. This correction likely stems from typical post-rally profit-taking, heightened expectations ahead of the fiscal first-quarter 2026 earnings release, along with broader market rotation amid macroeconomic uncertainties.
Despite the retreat, Micron carries a Zacks Rank #1 (Strong Buy), our highest rating, supported by consistent upward earnings estimate revisions. Consensus for the upcoming Q1 FY2026 release points to revenue of approximately $12.7 billion (up 46% year-over-year) and adjusted EPS near $3.91—more than doubling from the prior year. Analysts have bumped up their EPS estimates by 4.27% in the past 60 days.
Image Source: Zacks Investment
The pullback has improved the risk/reward profile of the stock. Micron's competitive positioning in HBM—where it has gained share against rivals like SK Hynix and Samsung—combined with new facilities coming online supports a multi-year growth narrative rather than a short-cycle peak. Broader industry forecasts project the AI memory market expanding meaningfully, with HBM alone potentially doubling in size annually through the decade.
What the Zacks Model Reveals
The Zacks Earnings ESP (Expected Surprise Prediction) seeks to find companies that have recently witnessed positive earnings estimate revision activity. This more recent information can be a better predictor for future earnings and can give investors a leg up during earnings season.
The technique has proven to be quite useful for finding positive earnings surprises. In fact, when combining a Zacks Rank #3 or better with a positive Earnings ESP, stocks produced a positive surprise 70% of the time according to our 10-year back test.
Micron (MU - Free Report) is a Zacks Rank #1 (Strong Buy) and boasts a +3.14% Earnings ESP. Another beat may be in the cards when the company reports results after the close on Wednesday. Micron has exceeded the earnings mark in each of the last four quarters, sporting an average beat of 9.4% over that timeframe.
Bottom Line
Risks remain, including potential delays in AI spending, competition intensifying supply, and macroeconomic headwinds affecting capex. However, Micron's fortified balance sheet, strategic focus on high-margin data center products, and proven execution provide a solid foundation. In my experience, dips in strong secular themes like this often present opportunities for patient investors.
Micron's journey in 2025 exemplifies how innovation can redefine a mature company in the AI era. With a Zacks Rank #1 (Strong Buy) and robust estimates underscoring continued momentum, the current levels offer an attractive point to consider building or adding to positions in this standout stock.