Micron (MU) Stock Rises as Strong AI Memory Demand Boosts Growth

Quick overview

During the European trading session on Thursday, the Micron Technology stock managed to extend its modest gains and traded near $948.80, showing 1.11 percent increase in the last 24 hours. Despite the bullish traction, the stock is still below its all time high of $1213 level.

Furthermore, the increased demand for Micron memory chips from AI companies might have been the reason for the company’s strong success. As everyone knows, AI systems require specialized memory chips in order to operate quickly and manage massive volumes of data. So, the growth of AI is boosting the company’s earnings and sales.

Strong Earnings Show the Company Is Growing

Moreover, the company’s good performance was also proven by its strong third quarter earnings report, in which it is revealed that the company made 41.5 billion dollars in sales, which was 346 percent higher than last year. It is also worth mentioning that the revenue was only around $11 billion in the same quarter last year. Meanwhile, GAAP net income was $28.24 billion and non-GAAP net income was $28.86 billion. Profit per share was $24.67 under GAAP and $25.11 under non-GAAP.

However, the highest revenue came from the data center business, with more than 25 billion dollars. In the meantime, the gross margin was also very good, around 85 percent. Moreover, the company’s adjusted free cash flow was $18.3 billion, which shows very strong financial health. These excellent earnings and strong future guidance gave investors confidence. As a result, the stock rose sharply and hit the all time high $1213.

Strong Future Guidance Boosts Investor Confidence

Considering all these positive achievements, the company gave very good guidance for the fourth quarter. Micron management expects that it will make 50 billion dollars in revenue. Meanwhile, the gross margin will remain around 86 percent and EPS will be around $31. These numbers show the company is confident about its future and expects strong sales.

On the other side, the company has already secured 22 billion dollars in long term AI supply deals, which was seen as another factor that helps the company to grow.

Micron’s business is strong. It has a good cash position and is paying a small dividend. Meanwhile, the company is investing heavily to make more chips. Experts say that if you believe in the future of AI, you can buy on the dip. Looking at the current situation, experts give an average target price of $1,200 to $1,500, while some analysts are even saying $2,000.

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Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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