Micron Technology Inc (NASDAQ:MU) stock rallies 15.08% (As on March 21, 11:43:57 AM UTC-4, Source: Google Finance) after the company gave a surprisingly strong revenue forecast for the current quarter, buoyed by demand for artificial intelligence hardware. The company said that its high-bandwidth memory (HBM) chips, which refer to ultrafast semiconductors used in the development of AI applications, were sold out for 2024. A majority of its 2025 supply has also been allocated. Micron, one of the two suppliers of HBM chips to Nvidia along with South Korea’s SK Hynix, was set to add nearly $19 billion to its market value, based on its premarket share price of $113.40.
MU in the second quarter of FY 24 has reported the adjusted earnings per share of 42 cents, beating the analysts’ estimates for the adjusted loss per share of 27 cents, according to Zacks Investment Research. The company had reported the adjusted revenue growth of 58 percent to $5.82 billion in the second quarter of FY 24, beating the analysts’ estimates for revenue of $5.33 billion. The company reported Non-GAAP net income of $476 million.
For the third quarter ending in May, Micron expects its per-share earnings to range from 38 cents to 52 cents. Analysts projected 24 cents. The company expects revenue to be in the range of $6.4 billion to $6.8 billion for the fiscal third quarter. That compares with an average analyst estimate of $5.99 billion. Memory is a key beneficiary of AI adoption and the company expects a V-shaped recovery in the industry, with revenues expected to grow by 55% in 2024 and 35% in 2025.
Additionally, MU has declared a quarterly dividend of $0.115 per share, payable April 16 to shareholders of record April 1. Investments in capital expenditures, net were $1.25 billion for the second quarter of 2024, which resulted in adjusted free cash flows of negative $29 million. Micron ended the second quarter of 2024 with cash, marketable investments, and restricted cash of $9.72 billion.
On the other hand, Timothy Arcuri of Swiss bank UBS emphasized that Micron had struck exactly the right note – also with regard to pricing and the durability of this cycle. “We have been saying for a long time that the peak will only come when the gross margin reaches it,” said the expert. This is unlikely until well into 2025. The stock has a “buy” rating, but He raised the price target slightly to 125 dollars.