Micron (MU) Stock Surges 5% on AI Chip Demand and U.S. Investment Plans
During the early European trading session on Friday, the Micron Technology stock maintained its previous session bullish trend...
Quick overview
- Micron Technology stock is trading at $991.64, reflecting a 4.52% gain, but remains below its all-time high of $1213.
- The company's upward trend is driven by high demand for memory chips used in AI computers and a recent $3 billion investment in US chip factories.
- Micron reported strong third quarter earnings with $41.5 billion in sales, a 346% increase from last year, and a gross margin of around 85%.
- Looking ahead, Micron expects $50 billion in revenue for the fourth quarter and has secured $22 billion in long-term AI supply deals.
During the early European trading session on Friday, the Micron Technology stock maintained its previous session bullish trend is still showing a strong gain above the $990 level. At the time we are writing this article, the stock is trading at $991.64, showing a 4.52 percent gain in the last 24 hours. Despite the bullish traction, the stock is still below its all time high of $1213 level.
Moreover, the reaaon for its upward trend can be associated with the very high demand for its special memory chips used in AI computers. Furthermore, the company recently announced 3 billion dollars in investment in US chip factories and plans to spend up to 250 billion dollars in America by 2035. This was seen as a positive factor for this company’s growth and pushed the stock up almost 5% in one day.
Micron Made More Money This Quarter
On the other hand, the company’s good performance was also proven by its strong third quarter earnings report, in which it was revealed that the company made 41.5 billion dollars in sales, which was 346 percent higher than last year. Meanwhile, the company’s 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.
It is also worth noting that 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.
This very strong earnings report made investors very happy as it showed Micron is making big money from AI demand. So, after the report, the stock jumped more than 15 percent in one day.
Micron Expects More Sales and Strong AI Growth Soon
Looking at 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 in its fourth quarter. Meanwhile, the gross margin will remain around 86 percent and EPS will be around $31 in Q4. 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.
Moreover, the company had a very strong cash flow of over 96 billion dollars last yea, which gives Micron lots of money to grow, pay a small dividend to shareholders, and build new factories fast. 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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