Micron Set to Face Earnings Test After Impressive 95% Stock Surge

• Micron Technology Inc. (MU) has surged 95% since April 8, driven by insatiable demand for its high-bandwidth memory (HBM) chips, critical for AI computing, positioning it as a top performer in the S&P 500 (SPX).
• Analysts project Micron’s third-quarter adjusted earnings per share at $1.60 on $8.9B in revenue, a year-over-year increase of 158% and 30%, respectively, though investors are focused on HBM supply constraints and gross margins, expected at 36.8%.
• Despite bullish sentiment, the stock’s rapid gains raise the risk of post-earnings consolidation, with options markets implying an 8% move after the Wednesday, June 25, report, per Bloomberg data.

Micron Technology Inc. (MU) has emerged as a key player in the artificial intelligence (AI) infrastructure boom, with its shares soaring 95% since April 8, when a broader market rally began following the pause of U.S. tariffs. Closing at $127.91 after a 4.88% gain in the last session, Micron has outperformed most of its peers, ranking as the fifth-best performer in the S&P 500 (SPX) since the index bottomed in April. The Boise, Idaho-based company, traditionally known for its memory chips, is capitalizing on the surging demand for high-bandwidth memory (HBM), a critical component in AI computing that works closely with processors from companies like Nvidia Corp. (NVDA). This demand has positioned Micron as a compelling investment for those seeking exposure to AI infrastructure beyond the usual tech giants.

The company’s HBM chips, which are essential for powering AI workloads due to their ability to handle massive data throughput, are in high demand, with supply constraints driving up prices. The complexity of producing and deploying these chips has created a bottleneck, further amplifying Micron’s role in the AI ecosystem. Joe Tigay, portfolio manager at Rational Equity Armor Fund, emphasized to Bloomberg the significance of HBM, stating, “Micron isn’t the star of AI, the way Nvidia is, but high-bandwidth memory chips are the gold standard for powering AI, and the demand for them is insatiable.” This sentiment underscores Micron’s unique position in the AI supply chain, even if it lacks the spotlight of more prominent names.

As Micron prepares to release its earnings after market close on Wednesday, June 25, investors are keenly focused on its financial performance. Analysts surveyed by Bloomberg project adjusted earnings per share of $1.60 on revenue of approximately $8.9 billion, representing a year-over-year increase of 158% and 30%, respectively. These figures highlight Micron’s robust growth trajectory, driven by its HBM business and broader demand for memory chips. However, profitability remains a critical concern after the company’s gross margins disappointed in the second quarter. Analysts expect adjusted gross margins to dip to 36.8% in the third quarter, compared to 37.9% in the prior quarter. NewStreet Research analysts are optimistic, forecasting a recovery in DRAM and NAND gross margins, which could enable Micron to exceed expectations.

The earnings report will also shed light on Micron’s ability to address HBM production challenges and meet the needs of hyperscalers and AI-focused customers. Jake Behan, head of capital markets at Direxion, noted, “Pricing and availability of Micron’s high-bandwidth memory will be a central focus. Investors will be looking for clarity on production, supply constraints, and how well-positioned Micron is to meet hyperscaler and AI customer demand.” Any shortfall in these areas could jeopardize the stock’s meteoric rise, with options market data suggesting an 8% stock price move post-earnings, higher than the historical average, according to Bloomberg.

Despite its impressive gains, Micron’s rally may face near-term challenges. Tigay, while remaining optimistic about the company’s long-term prospects, cautioned, “It wouldn’t surprise me to see some consolidation around earnings, or in the summer months, before the rally resumes later this year.” The stock’s significant run-up since April increases the risk of a selloff if the earnings report fails to meet lofty expectations. Still, Micron’s strategic position in the AI-driven memory market, coupled with its strong financial outlook, suggests it will remain a focal point for investors seeking to capitalize on the AI revolution.

WallStreetPit does not provide investment advice. All rights reserved.

• Bulenox: Get 91% OFF ... Use Discount Code: ZYY8U
• Risk Our Money Not Yours | Get 50% to 90% OFF ... Use Discount Code: MMBVBKSM
• Looking for the Best Cash Back? You’ve Found It