Following an electrifying performance in its fiscal 2024 second-quarter results, Micron Technology’s stock (NASDAQ: MU) soared over 14% in a single trading session on March 20. The company reported exceptional growth in revenue and earnings that shattered Wall Street expectations, signaling a remarkable turnaround. With Micron’s stock already up a staggering 93% over the past year, the company’s forward-looking revenue growth projections hint at even further potential gains. Let’s delve into the numbers to understand why investors should seize the opportunity to invest in this chipmaker before its revenue projections shoot for the stars.
Micron Accelerates Forward
In the latest quarter, Micron reported a remarkable 58% surge in revenue year over year, reaching $5.82 billion, significantly surpassing the $5.35 billion consensus estimate. Moreover, the company swung from an adjusted loss of $1.91 per share to a profit of $0.42 per share, defying analyst expectations of a $0.25 loss per share. The memory-chip market’s favorable supply-demand dynamics propelled higher prices, consequently boosting Micron’s margins substantially. Notably, dynamic random-access memory (DRAM) prices surged in the high teens, while NAND flash storage chip prices skyrocketed by 30%.
Micron’s adjusted gross margin spiked to 20% from a dismal negative 31.4% in the prior year, with an operating margin of 3.5%, a vast improvement from negative 56% previously. CEO Sanjay Mehrotra attributed this upturn to the burgeoning demand for memory in AI servers, stating:
“This improvement in market conditions was due to a confluence of factors, including strong AI server demand, a healthier demand environment in most end markets, and supply reductions across the industry.”
Mehrotra further anticipated a continued uptrend in memory prices through the year, forecasting record revenue and enhanced profitability in fiscal year 2025. Notably, Micron’s guidance for the current quarter surpassed analyst expectations, with projected third-quarter revenue of $6.6 billion and adjusted earnings of $0.45 per share at the midpoint of its range, outpacing Wall Street estimates.
The Obvious Choice: Investing in Micron
Trading at a mere 6.4 times sales, below the U.S. technology sector’s price-to-sales ratio of 7.3, Micron stock presents an enticing opportunity for investors. Consensus estimates project the company to achieve $24.6 billion in revenue by year-end, reflecting a 58% surge from the previous year, with sustained robust growth anticipated for the following year. Should Micron achieve a revenue milestone of $34 billion in fiscal 2025, maintaining its current price-to-sales ratio, it could witness a market cap surge to $217 billion, a noteworthy 67% increase from its current valuation.
With Micron’s stock delivering substantial value and poised for further growth post its stellar earnings report, potential investors should consider seizing the opportunity before its value escalates even higher. The wisdom of such a move is apparent, given the company’s impressive growth trajectory and the positive outlook for the semiconductor industry.
Are you ready to invest in Micron Technology and ride the wave of success?
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Harsh Chauhan has no position in any stocks mentioned. The Motley Fool also has no position in any of the stocks cited. The Motley Fool upholds strict disclosure standards.
The opinions expressed here are solely those of the author and do not necessarily align with Nasdaq, Inc.’s viewpoints.
