Micron Needs To Live Up To Its AI Darling's Darling Title

On Wednesday, Micron Technology Inc MU posted a failed-to-impress fiscal third quarter report. But, even even guiding for record results didn’t bring as much as expected enthusiasm as Micron holds the promise of being one of the biggest beneficiaries of the AI era next to the AI darling and chip leader, Nvidia Corporation NVDA and that comes with grand expectations as its shares have more than doubled over the past year.  While the smartphone and PC markets remain sluggish, its data center business grew 50% on a quarter-to-quarter basis on the back of a strong AI portfolio.

Fiscal Third Quarter Highlights

For the quarter ended on May 30th, Micron reported a revenue of $6.81 billion, surpassing LSEG’s consensus estimate of $6.67 billion. Micron reported it is gaining share in high-margin AI products, including HBM and data center storage offerings.

 Compared to last year’s comparable quarter when it reported a loss of $1.9 billion, or $1.73 per share, Micron managed earn a net income of $332 million, or 30 cents per share. Adjusted earnings per share amounted to 62 cents, also surpassing LSEG’s consensus estimate of 51 cents.

Micron Is Well Positioned For AI-Fueled Growth 

For the fourth-quarter, Micron guided for revenue growth of about 90%. On the earnings call, CEO Sanjay Mehrotra emphasized that data center revenue is on track to reach record levels in fiscal 2024 and continue to grow significantly throughout fiscal 2025. Moreover, Micron expects to significantly improve its profitability in fiscal 2025 despite increased spending to support its costly AI-related offerings. Mehrotra also said the company’s AI-oriented products were likely to increase in price. What bodes well for Micron is that it has Nvidia needs, as its advanced memory are needed for AI graphics processing units (GPUs) that Nvidia designs and sells.

Micron remains confident that it will be one of the biggest beneficiaries in the semiconductor industry of the multi-year growth opportunity driven by AI. Micron said that its high bandwidth memory, the kind used in AI chips, is sold out through 2025. As a computer memory and data storage solution maker, Micron’s offerings make it well positioned in a world that is racing to enable AI. More importantly, by providing the AI darling, Nvidia with memory solutions for its chips, it pretty much secured its benefits through this partnership. But, the latest quarter just wasn’t as impressive as anything below fantastic is not good enough amid such lofty expectations. 

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