AI demand is strong, Micron Tech's revenue surged by over 90% last quarter, and this quarter's guidance far exceeds expectations, with a post-market jump of over 10% | Financial Report Insights

Micron Technology, the leading storage chip company in the United States, has seen accelerated growth in the past fiscal quarter, with its performance in the current quarter once again surpassing Wall Street expectations, reflecting strong demand for High Bandwidth Memory (HBM) in the artificial intelligence (AI) boom.

After the US stock market closed on Wednesday, September 25th, Micron Technology announced its financial results for the fourth quarter of the fiscal year 2024, ending on August 29, 2024, and provided guidance for the first quarter of the fiscal year 2025.

1) Key Financial Data:

Revenue: In the fourth quarter, revenue was $7.75 billion, a year-on-year increase of 93.3%. Analysts expected $7.66 billion, while the company's guidance was $7.4 billion to $7.8 billion. In the previous quarter, revenue increased by 81.6% year-on-year.

EPS: Diluted earnings per share (EPS) on a non-GAAP basis in the fourth quarter was $1.18, compared to a loss of $1.07 per share in the same period a year ago. Analysts expected $1.12, while the company's guidance was $1.00 to $1.16. In the previous quarter, EPS turned from a loss to a profit of $0.62 per share year-on-year.

Operating Profit: Adjusted operating profit in the fourth quarter was $1.745 billion, compared to a loss of $1.208 billion in the same period a year ago. Analysts expected $1.58 billion. In the previous quarter, operating profit turned from a loss to a profit of $941 million year-on-year.

Gross Margin: The adjusted gross margin in the fourth quarter was 36.5%, compared to -9.1% in the same period a year ago. Analysts expected 34.7%, while the company's guidance was 33.5% to 35.5%. In the previous quarter, the gross margin was 28.1%.

2) Guidance:

Revenue: Revenue for the first quarter is expected to be $8.7 billion, with a range of plus or minus $200 million, equivalent to a guidance range of $8.5 billion to $8.9 billion. Analysts expected $8.32 billion.

EPS: Diluted EPS for the first quarter is expected to be $1.74, with a range of plus or minus $0.08, equivalent to a guidance range of $1.66 to $1.82. Analysts expected $1.52.

Gross Margin: The adjusted gross margin for the first quarter is expected to be 39.5%, with a range of plus or minus 1 percentage point, equivalent to a guidance range of 38.5% to 40.5%. Analysts expected 37.6%.

Micron's performance in the previous quarter exceeded expectations across the board, but its guidance for the current quarter fell short of Wall Street's "very high expectations." Additionally, limited HBM chip production capacity has led to a continuous decline in the company's stock price. Some analysts have noted that the market sentiment towards Micron has been less optimistic recently, with Citigroup even stating before Micron's earnings release that many investors had high expectations for the company's performanceThe performance of Micron this time has obviously injected a shot in the arm for stock market investors. After the financial report was released, Micron Technology's stock price rose nearly 1.9% on Thursday, with a post-market surge of over 10%.

Revenue for this quarter expected to reach a historical high, "significant record" for the fiscal year

The financial report shows that both revenue and profit for Micron in the fourth quarter accelerated compared to the previous quarter, exceeding Wall Street's expectations. Analysts expected a 91% revenue growth for Micron in the fourth quarter, but Micron outperformed with a growth rate of 93%.

Furthermore, Micron's performance guidance is also very strong. Based on the guidance range, Micron expects revenue in the first quarter to grow by nearly 80% to about 88%, while analysts expected growth to be close to 76%. Micron's first-quarter EPS profit range overall exceeds analyst expectations, with the high end of EPS guidance exceeding expectations by nearly 20% and the low end by 9.2%.

In the announcement of the financial report, Micron CEO Sanjay Mehrotra attributed the revenue growth in the fourth quarter to AI demand and optimistically expects first-quarter revenue to reach a single-season historical high. He stated:

"Strong AI demand drove data center DRAM products and our industry-leading HBM to grow. Data center SSD sales led to record NAND revenue, with revenue exceeding $1 billion for the first time this quarter."

"We are entering the 2025 fiscal year in Micron's best competitive position ever. We expect first-quarter revenue to reach a historical high, and the revenue for the 2025 fiscal year will set a significant record, with significantly improved profitability."

HBM market size expected to exceed $25 billion in 2025, ramping up production of HBM3E 12H early in the year

Before Micron released its financial report, analysts expected strong growth in revenue for HBM, one of Micron's most profitable products used for AI data processing. In the financial report, Micron pointed out that the data center business where HBM is located achieved record annual revenue in the 2024 fiscal year, and is expected to grow significantly in the 2025 fiscal year.

Micron expects the overall market size (TAM) for HBM to increase from around $4 billion in the calendar year 2023 to over $25 billion in 2025.

In February of this year, Micron began mass production of HBM3E designed specifically for AI and supercomputers. In this financial report, Micron mentioned the progress of this product, stating that compared to competitors' HBM3E 8H 24GB capacity solution, Micron's HBM3E 12H 36GB capacity product has a 20% lower power consumption and provides 50% more DRAM capacity.

Micron plans to ramp up production of HBM3E 12H products early in the calendar year 2025, increasing product shipments throughout the year.

Micron mentioned that the demand for data center solid-state drives (SSDs) continues to grow strongly due to AI, as well as the recovery of the traditional PC and storage markets. Data center SSD revenue in the fourth quarter exceeded $1 billion, setting a record for a single quarter, with data center SSD revenue in the 2024 fiscal year more than doubling compared to a year ago