Micron Technology just released its latest earnings report, showing exciting results on all fronts for this quarter. Revenues were 6.8 billion dollars, with a 177% increase compared to the previous quarter and 82% compared to the previous year. However, surprisingly, Micron Technology (NASDAQ:MU) stock price fell 6.68% in the after-market. Let’s find out why.
Beating estimates is not enough to make investors happy, an equally positive outlook is needed. Micron’s forecasts, while positive, were in line with analysts’ expectations, leaving the market a little perplexed. After all, with all the momentum of theartificial intelligence (AI) that we are talking about, perhaps something more was expected.
However, it is important to note that Micron stock has already risen significantly this year and this quarter remains solid, with encouraging comments about the future. There may be an interesting buying opportunity, but it is still too early to tell how big it is.
Let’s dive deeper into Micron’s Results
Revenues: $6.8 billion, of which $4.7 billion came from DRAM and $2.1 billion from NAND. DRAM represents 69% of total revenue and increased 133% compared to the previous quarter.
Price increase: Both Micron and Samsung are expected to see a further price increase later this year due to strong demand. This will impact the margins of companies like Nvidia and AMD that use Micron chips in their data centers.
Business segments: The network saw an increase of 18% compared to the previous quarter and 85% compared to the previous year. Mobile remained stable compared to the previous quarter, but increased 94% year over year. Embedded grew 16% and 42% respectively, while storage jumped 50% and 116%.
Margins and profits: Gross margin increased to 28%, net income to $72 million, and earnings per share to 62 cents.
Dividends and share repurchases: Micron returned $5.5 billion to shareholders in the form of buybacks and dividends, including the repurchase of 60 million shares. However, buybacks have been temporarily suspended for this quarter.
Optimism for the future, but caution is needed
Micron expects strong AI-driven demand for its data center productsresulting in continued price increases through 2024. Additionally, the company is confident it can achieve record revenue in fiscal 2025, with significantly improved profitability.
However, it is important to consider that the market is in the early stages of a multi-year race to enable artificial general intelligence (AGI), which will require ever-increasing demand for DRAM and NAND memory. Micron believes it is a major beneficiary of this growth opportunity.
Conclusions
The drop in Micron’s stock price after a positive quarter could represent apurchasing opportunity. However, it is good to be cautious and take into account the company’s future forecasts and general market conditions.
Monitor the following key factors:
- Trend in demand for AI: Will strong demand for AI support Micron’s growth?
- DRAM and NAND prices: Will the expected price increases materialize?
- Competition: How will competitors react to Micron’s leadership?
If you are convinced of Micron’s long-term future and are willing to tolerate some short-term volatility, the decline in the share price could represent an interesting investment opportunity.
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