Micron Expected to Log Surging Growth as Investors Debate Timeline of Memory Crunch

Dow Jones
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Micron Technology is set to release its fiscal fourth-quarter financial results after the market closes on Wednesday. Here's what you need to know.

 

PROFIT: The company is expected to post a profit of $35.79 billion in the fourth quarter, according to analysts polled by FactSet. That compares with a profit of $3.2 billion in the same period last year.

 

ADJUSTED EARNINGS: Analysts expect Micron to report $31.72 a share in adjusted earnings after stripping out some one-time items, up from $3.03 a share a year earlier.

 

REVENUE: Revenue is expected to grow to $51.33 billion from $11.32 billion a year prior.

 

Shares were recently up 1.5% at $1,069.74. The stock has nearly quadrupled in value this year.

 

WHAT TO WATCH

--Micron's report will cap off a year of blowout earnings, driven by a shortage of memory chips other technology companies need to build out their artificial-intelligence infrastructure. The demand for memory has propelled Micron's revenue into the tens of billions and placed the company among an elite group of stocks with ten-figure market capitalizations. But already, investors are wondering about what's next. "The debate has very clearly shifted from 'how good can it get?' to 'how long can it stay this good,'" Morgan Stanley analysts put it in a recent note.

--Luckily for Micron, the answer may be that it can stay this good for quite a while, according to some analysts. Morgan Stanley sees multiple years of continued tightness in the memory market, even as incremental supply becomes available from Micron, its domestic competitors, and Chinese suppliers. D.A. Davidson's Gil Luria went even further, arguing that Micron's comparatively modest valuation incorrectly implies that the memory cycle has already ended. "The memory cycle is The Cycle. The related dislocation has to do with investors expecting the memory cycle to be over, while underwriting continued CPU growth through 2030," Luria wrote. "We suspect the AI cycle is actually one cycle for GPUs, CPUs and memory."

 
 

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