Micron Technology is getting a big lift from data centers running artificial intelligence applications.
But Micron stock slid Thursday even though the memory-chip giant crushed its fiscal third-quarter estimates and guided higher than views for the current period, thanks to booming demand from AI data centers.
The Boise, Idaho-based company late Wednesday said its data center revenue more than doubled year over year in the quarter ended May 29. Micron is providing high-bandwidth memory (HBM) and other advanced products to the market.
In fiscal Q3, Micron's earnings soared 208% year over year to $1.91 a share. Sales jumped 37% to $9.3 billion. Analysts polled by FactSet were expecting Micron to earn $1.60 a share on sales of $8.86 billion.
For the current quarter, Micron forecast adjusted earnings of $2.50 a share, up 112% year over year, on sales of $10.7 billion, up 38%. That's based on the midpoint of its guidance. Wall Street had been looking for earnings of $2.03 a share on sales of $9.9 billion in fiscal Q4.
"As AI drives unprecedented demand for high-performance memory and storage, Micron is exceptionally well positioned to capitalize on this transformative era," Micron Chief Executive Sanjay Mehrotra said on a conference call with analysts.
The insatiable demand for data center capacity for generative and agentic AI has been a godsend for chipmakers exposed to the trend. That includes graphics processing unit (GPU) makers Nvidia and AMD and custom-chip designers Broadcom and Marvell Technology.
Chip foundry Taiwan Semiconductor Manufacturing also is benefiting from the ramp-up in AI-related chip production. The same goes for networking-chip makers Astera Labs and Credo Technology.
Micron Stock Gets Price-Target Hikes
On Thursday, at least 19 Wall Street analysts raised their price targets on Micron stock after the company's beat-and-raise report.
However, Micron stock fell after the report. On the stock market today, Micron stock dropped 1% to close at 126.
Mizuho Securities trading-desk analyst Jordan Klein questioned the muted reaction to Micron's stellar report. It's likely because the stock was up 35% in the three weeks before the report, he said in a client note. So, the Micron stock was already "very well owned," he said.
Piper Sandler analyst Harsh Kumar reiterated his overweight rating on Micron stock and upped his price target to 165 from 120.
He called Micron's fiscal Q3 report "impressive."
"We continue to see (Micron) as an outsized beneficiary from current market trends in both data center and AI due to their HBM products and market positioning," Kumar said in a client note.
On June 10, Micron announced that it had begun shipping HBM4, its next-generation high-bandwidth memory product for AI data centers.
Micron Expanding U.S. Factory Footprint
Further, on June 12, Micron announced plans to expand its U.S. investments to about $150 billion in domestic memory-chip manufacturing and $50 billion in research and development. That spending includes expansions and modernizations of factories in Boise, Idaho; and Manassas, Va., plus a new megafab in New York.
In addition to robust demand for memory chips for AI data centers, Micron is benefiting from increased dynamic-random access memory (DRAM) content in smartphones, PCs and autonomous vehicles, TD Cowen analyst Krish Sankar said in a client note. He maintained his buy rating on Micron stock and raised his price target to 150 from 125.
Micron stock ranks first out of 10 stocks in IBD's Computer-Data Storage industry group, according to IBD Stock Checkup. It has a best-possible IBD Composite Rating of 99.
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