We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Micron is a leading global memory and storage provider.
High demand and tight supply are driving Micron's margins.
Share buybacks will be another bullish catalyst for Micron shares.
Micron Technology Company Overview
Zacks Rank #1 (Strong Buy) Micron Technology ((MU - Free Report) ) manufactures and markets high-performance memory and storage technologies, including Dynamic Random-Access Memory (DRAM), NAND flash memory, NOR Flash, and other memory solutions. The Idaho-based company’s solutions power leading-edge computing, consumer, networking, mobile, automotive, industrial, and data center products. The company’s mission is to be a global leader in memory and storage solutions.
AI Demand & the DRAM Bottleneck
The DRAM technology Micron manufactures is critical to the artificial intelligence buildout because AI models depend on massive streams of data and model parameters that must be accessed, processed, and moved at ultra-high speeds to prevent the processor from stalling. AI computation is heavily “memory-bound,” meaning the processor’s speed is often limited by how fast data can be fed to it rather than how fast it can calculate. Recently, SpaceX ((SPCX - Free Report) ) CEO Elon Musk, whose company is a leading provider of compute, said that “Few realize that memory, not compute, is the rate limiter of the Agentic Era.”
Micron is currently benefiting from a perfect elixir of soaring AI infrastructure demand reshaping memory and storage demand mixed with a tight global DRAM supply. Micron continues to benefit as hyperscalers jockey for AI supremacy and spend increasingly more CAPEX on AI infrastructure. Last quarter, Micron reported revenues that more than tripled year-over-year along with earnings-per-share that increased 10-fold.
Image Source: Zacks Investment Research
Meanwhile, because supply is tight and Micron is one of only three major global DRAM suppliers, its gross margins have soared to more than 80%.
Image Source: Zacks Investment Research
Micron: A Consistent Earnings Outperformer
Wall Street expectations remain high. Next quarter, Zacks Consensus Estimates suggest revenue will grow 352.68% while earnings spike 699.16%. Nevertheless, Micron has proven it can beat high estimates. The memory leader has beaten Wall Street analyst expectations for 14 consecutive quarters, with an average beat of 21% over the past four.
Image Source: Zacks Investment Research
High Demand Visibility
As of the fourth quarter, Micron had signed 26 take-or-pay strategic customer agreements (SCAs), which management estimates will represent more than 35% of revenues through 2030. Additionally, approximately three-quarters of that expected revenue has a defined pricing framework.
Micron Buybacks to Begin as CHIPS Act Restrictions End
Micron has faced a buyback restriction tied to the U.S. CHIPS Act agreement, under which the company received a $6.1 billion reward. However, the share buyback restrictions end on December 9th. Recently, Micron’s board approved a $35.16 billion share repurchase program. The share buyback will have a bullish impact on the supply/demand dynamics for Micron shares.
Micron has a Reasonable Valuation
Micron not only has one of the fastest-growth rates on Wall Street, but it also sports one of the most attractive valuations. Micron’s P/E ratio is currently just 13.63x.
Image Source: Zacks Investment Research
Micron Technical View
Micron shares are setting up in a bullish monthly flag pattern.
Image Source: TradingView
Bottom Line
Amid critical DRAM bottlenecks, surging gross margins, and expanding enterprise agreements, Micron is well positioned to continue benefiting from the ongoing AI infrastructure boom.
View the Zacks #1 Rank List
Bull of the Day: Micron (MU)
Key Takeaways
Micron Technology Company Overview
Zacks Rank #1 (Strong Buy) Micron Technology ((MU - Free Report) ) manufactures and markets high-performance memory and storage technologies, including Dynamic Random-Access Memory (DRAM), NAND flash memory, NOR Flash, and other memory solutions. The Idaho-based company’s solutions power leading-edge computing, consumer, networking, mobile, automotive, industrial, and data center products. The company’s mission is to be a global leader in memory and storage solutions.
AI Demand & the DRAM Bottleneck
The DRAM technology Micron manufactures is critical to the artificial intelligence buildout because AI models depend on massive streams of data and model parameters that must be accessed, processed, and moved at ultra-high speeds to prevent the processor from stalling. AI computation is heavily “memory-bound,” meaning the processor’s speed is often limited by how fast data can be fed to it rather than how fast it can calculate. Recently, SpaceX ((SPCX - Free Report) ) CEO Elon Musk, whose company is a leading provider of compute, said that “Few realize that memory, not compute, is the rate limiter of the Agentic Era.”
Micron is currently benefiting from a perfect elixir of soaring AI infrastructure demand reshaping memory and storage demand mixed with a tight global DRAM supply. Micron continues to benefit as hyperscalers jockey for AI supremacy and spend increasingly more CAPEX on AI infrastructure. Last quarter, Micron reported revenues that more than tripled year-over-year along with earnings-per-share that increased 10-fold.
Image Source: Zacks Investment Research
Meanwhile, because supply is tight and Micron is one of only three major global DRAM suppliers, its gross margins have soared to more than 80%.
Image Source: Zacks Investment Research
Micron: A Consistent Earnings Outperformer
Wall Street expectations remain high. Next quarter, Zacks Consensus Estimates suggest revenue will grow 352.68% while earnings spike 699.16%. Nevertheless, Micron has proven it can beat high estimates. The memory leader has beaten Wall Street analyst expectations for 14 consecutive quarters, with an average beat of 21% over the past four.
Image Source: Zacks Investment Research
High Demand Visibility
As of the fourth quarter, Micron had signed 26 take-or-pay strategic customer agreements (SCAs), which management estimates will represent more than 35% of revenues through 2030. Additionally, approximately three-quarters of that expected revenue has a defined pricing framework.
Micron Buybacks to Begin as CHIPS Act Restrictions End
Micron has faced a buyback restriction tied to the U.S. CHIPS Act agreement, under which the company received a $6.1 billion reward. However, the share buyback restrictions end on December 9th. Recently, Micron’s board approved a $35.16 billion share repurchase program. The share buyback will have a bullish impact on the supply/demand dynamics for Micron shares.
Micron has a Reasonable Valuation
Micron not only has one of the fastest-growth rates on Wall Street, but it also sports one of the most attractive valuations. Micron’s P/E ratio is currently just 13.63x.
Image Source: Zacks Investment Research
Micron Technical View
Micron shares are setting up in a bullish monthly flag pattern.
Image Source: TradingView
Bottom Line
Amid critical DRAM bottlenecks, surging gross margins, and expanding enterprise agreements, Micron is well positioned to continue benefiting from the ongoing AI infrastructure boom.