Micron Technology, Inc. (MU Quick QuoteMU - Free Report) is slated to report first-quarter fiscal 2025 results after market close on Dec. 18.

The company projects fiscal first-quarter revenues to be $8.7 billion (+/- $200 million). The Zacks Consensus Estimate for the top line is pegged at $8.71 billion, which implies strong year-over-year growth of 84.3%.

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Meanwhile, Micron estimates adjusted earnings of $1.74 (+/-8 cents). The consensus mark for the bottom line has remained unchanged at $1.75 per share over the past 60 days, which indicates a robust improvement from the year-ago quarter’s loss of 95 cents.

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The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 72.7%.

Micron Technology, Inc. Price and EPS Surprise

Micron Technology, Inc. price-eps-surprise | Micron Technology, Inc. Quote

Let’s see how things have shaped up before this announcement.

Factors Influencing Micron’s Upcoming Results

Micron’s first-quarter results are poised to reflect a significant boost from the growing demand for memory chips, fueled by the increasing adoption of GPU-enabled artificial intelligence (AI) servers. As data center operators expand their infrastructure to support generative AI and large language models, memory chips have become essential components. This surge in demand for AI-driven technologies likely bolstered Micron’s revenues during the quarter under review.

Another positive factor is the improving supply-demand dynamics in the memory chip market. For several quarters, Micron faced headwinds from excess inventory across various sectors, which heavily impacted its financial results. However, conditions have improved over the past year, which has resulted in improvements in prices for its core products—DRAM and NAND chips.

According to the Zacks Consensus Estimate, DRAM revenues for the first quarter are expected to hit $5.92 billion, marking an impressive 91% year-over-year growth. Similarly, NAND revenues are projected at $2.6 billion, reflecting an extraordinary 111.5% surge from the same period last year. These figures highlight Micron’s ability to capitalize on favorable market trends.

However, challenges persist. Inflationary pressures and macroeconomic uncertainties have dampened consumer spending, likely reducing demand for memory chips in key markets, such as smartphones and personal computers. Additionally, Micron’s heavy reliance on China poses a risk amid ongoing U.S.-China trade tensions. Margins may also feel the strain from a higher mix of lower-margin NAND products and limited cost-saving progress in manufacturing processes.

Micron Stock Price Performance & Valuation

Year to date (YTD), Micron shares have risen 19.6%, underperforming the Zacks Computer and Technology sector’s growth of 34.5%. Compared with other major semiconductor companies, MU stock has underperformed NVIDIA (NVDA Quick QuoteNVDA - Free Report) , Marvell Technologies (MRVL Quick QuoteMRVL - Free Report) and Texas Instruments (TXN Quick QuoteTXN - Free Report) , which have registered YTD gains of 181.3%, 84.6% and 12.4%, respectively.

YTD Price Return Performance

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Now, let’s look at the value Micron offers investors at the current levels. MU stock is trading at a discount with a forward 12-month P/S of 2.79X compared with the broader tech sector’s 6.28X.

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Investment Consideration for MU Stock

Micron is reaping the rewards of improving market dynamics, effective sales strategies and strong performance across its diverse business segments. A key driver of its top-line growth has been the improvement in data center inventory levels, coupled with stabilization in markets like automotive, industrial and other sectors. These developments reflect a healthier demand environment that has bolstered the company’s revenue trajectory.

Looking ahead, Micron anticipates a favorable pricing environment for DRAM and NAND chips in the coming year, further boosting its revenue potential. The demand surge for AI servers has created a scarcity of advanced DRAM and NAND supplies, setting the stage for price increases. Additionally, the accelerating adoption of 5G in Internet of Things (IoT) devices and wireless infrastructure is expected to fuel further demand for Micron’s memory and storage solutions, enhancing its market position.

However, challenges persist. The ongoing U.S.-China trade tensions remain a critical risk factor. Given Micron’s substantial exposure to the Chinese market, any escalation in disputes could disrupt its supply chain or lead to new tariffs, directly impacting its margins. Moreover, while the pricing outlook for memory chips appears robust, the company’s reliance on lower-margin NAND products and its slow progress in achieving manufacturing efficiencies could temper profitability growth in the near term.

Micron’s future looks promising, but navigating these headwinds will be essential to sustaining its momentum.

Conclusion: Hold MU Stock for Now

Micron is in a strong position to deliver solid growth, driven by rising demand for memory chips in AI servers and improving market dynamics. However, challenges like trade tensions with China and margin pressures should temper expectations for a significant breakout in the near term.

Given its attractive valuation and improving fundamentals, holding Micron stock for now seems like the best strategy. The company has strong potential, but investors should wait to see how the macroeconomic environment and trade relations evolve before making any aggressive moves. For now, it’s best to stay patient and monitor this Zacks Rank #3 (Hold) stock heading into first-quarter earnings. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.