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Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
The company projects fiscal second-quarter revenues to be $7.9 billion (+/- $200 million). The Zacks Consensus Estimate for the top line is pegged at $7.9 billion, which implies year-over-year growth of 35.6%.
Meanwhile, Micron estimates adjusted earnings of $1.43 (+/-10 cents). The consensus mark for the bottom line has remained unchanged at $1.43 per share over the past 60 days, which indicates a year-over-year improvement of 240.5%.
Image Source: Zacks Investment Research
The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 72.3%.
Micron Technology, Inc. Stock Price and EPS Surprise
Our proven model does not conclusively predict an earnings beat for Micron this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.
MU carries a Zacks Rank #4 (Sell) and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Factors to Note Ahead of Micron’s Q2 Results
Micron’s second-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 is likely to have 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 second quarter are expected to hit $6.2 billion, marking impressive 32.2% year-over-year growth. Similarly, NAND revenues are projected at $1.6 billion, implying a 2.4% increase from the same period last year. These figures highlight Micron’s ability to capitalize on favorable market trends.
However, Micron’s profitability is likely to have been negatively impacted by a shift toward lower-priced consumer products and underutilization of NAND production capacity. Moreover, 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
Over the past year, Micron shares have risen 9.7%, outperforming the Zacks Computer – Integrated Systems industry’s decline of 9.1%. Compared with other major semiconductor companies, MU stock has underperformed Broadcom (AVGO - Free Report) , NVIDIA (NVDA - Free Report) and Taiwan Semiconductor (TSM - Free Report) , which have registered gains of 56.9%, 33.9 % and 30.7%, respectively.
One-Year MU Stock Price Return Performance
Image Source: Zacks Investment Research
Micron Key Valuation Metric
From a valuation standpoint, MU appears to be trading at a discount relative to the industry and is trading well below its mean. Going by the price/sales ratio, the company’s shares currently trade at 2.80 forward sales, lower than 3.15 for the industry and the stock’s mean of 2.98.
Micron Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
Investment Consideration for MU Stock
Beyond AI and data centers, Micron’s business is still significantly tied to traditional consumer markets, including personal computers (PCs) and smartphones, both of which are seeing sluggish demand recovery.
In the first quarter of fiscal 2025, Micron’s Embedded Business Unit, which includes mobile memory, saw revenues decline 10% sequentially. The company expects low-single-digit growth in smartphone shipments and mid-single-digit growth in PC sales for 2025. These weak projections suggest that a full recovery in Micron’s consumer-driven segments is still far off, limiting the upside for its DRAM and NAND sales.
Additionally, 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 slow progress in achieving manufacturing efficiencies could temper profitability growth in the near term.
Conclusion: Sell MU Stock for Now
Despite solid year-over-year growth projections for the top and bottom lines in the second quarter, Micron faces multiple near-term risks that could weigh on the stock’s price performance. Margin contraction, weakening consumer demand and geopolitical uncertainties all present serious headwinds, making it a good time to exit investments in MU stock.
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Micron Stock Before Q2 Earnings: A Smart Buy or Risky Investment?
Micron Technology, Inc. (MU - Free Report) is slated to report second-quarter fiscal 2025 results on March 20, after market close.
Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.
The company projects fiscal second-quarter revenues to be $7.9 billion (+/- $200 million). The Zacks Consensus Estimate for the top line is pegged at $7.9 billion, which implies year-over-year growth of 35.6%.
Meanwhile, Micron estimates adjusted earnings of $1.43 (+/-10 cents). The consensus mark for the bottom line has remained unchanged at $1.43 per share over the past 60 days, which indicates a year-over-year improvement of 240.5%.
Image Source: Zacks Investment Research
The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 72.3%.
Micron Technology, Inc. Stock Price and EPS Surprise
Micron Technology, Inc. price-eps-surprise | Micron Technology, Inc. Quote
Earnings Whispers for Micron
Our proven model does not conclusively predict an earnings beat for Micron this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.
MU carries a Zacks Rank #4 (Sell) and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Factors to Note Ahead of Micron’s Q2 Results
Micron’s second-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 is likely to have 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 second quarter are expected to hit $6.2 billion, marking impressive 32.2% year-over-year growth. Similarly, NAND revenues are projected at $1.6 billion, implying a 2.4% increase from the same period last year. These figures highlight Micron’s ability to capitalize on favorable market trends.
However, Micron’s profitability is likely to have been negatively impacted by a shift toward lower-priced consumer products and underutilization of NAND production capacity. Moreover, 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
Over the past year, Micron shares have risen 9.7%, outperforming the Zacks Computer – Integrated Systems industry’s decline of 9.1%. Compared with other major semiconductor companies, MU stock has underperformed Broadcom (AVGO - Free Report) , NVIDIA (NVDA - Free Report) and Taiwan Semiconductor (TSM - Free Report) , which have registered gains of 56.9%, 33.9 % and 30.7%, respectively.
One-Year MU Stock Price Return Performance
Image Source: Zacks Investment Research
Micron Key Valuation Metric
From a valuation standpoint, MU appears to be trading at a discount relative to the industry and is trading well below its mean. Going by the price/sales ratio, the company’s shares currently trade at 2.80 forward sales, lower than 3.15 for the industry and the stock’s mean of 2.98.
Micron Forward 12-Month P/S Ratio
Image Source: Zacks Investment Research
Investment Consideration for MU Stock
Beyond AI and data centers, Micron’s business is still significantly tied to traditional consumer markets, including personal computers (PCs) and smartphones, both of which are seeing sluggish demand recovery.
In the first quarter of fiscal 2025, Micron’s Embedded Business Unit, which includes mobile memory, saw revenues decline 10% sequentially. The company expects low-single-digit growth in smartphone shipments and mid-single-digit growth in PC sales for 2025. These weak projections suggest that a full recovery in Micron’s consumer-driven segments is still far off, limiting the upside for its DRAM and NAND sales.
Additionally, 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 slow progress in achieving manufacturing efficiencies could temper profitability growth in the near term.
Conclusion: Sell MU Stock for Now
Despite solid year-over-year growth projections for the top and bottom lines in the second quarter, Micron faces multiple near-term risks that could weigh on the stock’s price performance. Margin contraction, weakening consumer demand and geopolitical uncertainties all present serious headwinds, making it a good time to exit investments in MU stock.