AI winner! Micron Technology's last quarter revenue exceeded expectations by nearly 60%, and this quarter's guidance once again crushed expectations, with a post-market surge of over 10% | Financial Report Insights

American storage chip giant Micron Technology has become another winner in the artificial intelligence (AI) boom, delivering a more impressive report card than Wall Street expected. In the just-ended second quarter, revenue exceeded expectations with a strong increase of nearly 60%, and the growth momentum for this quarter is even stronger, reflecting the strong drive of AI demand for chip applications in areas such as data centers.

Micron Technology specifically mentioned that the highly anticipated high-bandwidth memory (HBM) new product HBM3E will supply NVIDIA's AI chip H200 Tensor Core GPU. The second quarter was the first quarter in which HBM3E recorded revenue, and for the entire natural year of 2024, HBM3E is already out of stock. Most of the HBM3E available for 2025 has been allocated to orders scheduled for 2025.

After the financial report was released, Micron Technology, which rose by about 2.4% on Wednesday, saw its post-market gains expand rapidly to over 10%.

Revenue growth rate in the second quarter is nearly four times that of the previous quarter, operating profit exceeds $2 billion, unexpectedly turning losses into profits

After the U.S. stock market closed on Wednesday, March 20, Micron Technology announced that for the second quarter of the 2024 fiscal year ending on February 29, 2024, revenue accelerated faster than expected, with a growth rate 3.7 times that of the previous quarter, and operating profit turned from loss to profit, contrary to analysts' expectations of continued losses.

• Revenue for the second quarter was $5.82 billion, an increase of approximately 57.7% year-on-year, far exceeding the 15.6% growth in the first quarter, higher than analysts' expected $5.35 billion, and above Micron Technology's self-guided range of $5.1 billion to $5.5 billion.
• Non-GAAP adjusted operating profit for the second quarter was $204 million, compared to a loss of $2.077 billion in the same period last year and a loss of $955 million in the first quarter. Analysts had expected an operating loss of $238.4 million.
• Adjusted earnings per share (EPS) for the second quarter were $0.42, compared to a loss of $1.91 in the same period last year and a loss of $0.95 in the first quarter, outperforming Micron Technology's guided range of a loss of $0.38 to $0.52 per share.
• Gross margin after adjustments for the second quarter was 20%, far exceeding analysts' expected 13.6% and higher than Micron Technology's guided range of 11.5% to 14.5%Micron Tech's CEO Sanjay Mehrotra commented that in the second quarter, the company's revenue, gross margin, and EPS all significantly exceeded the top end of the company's guidance range. The outstanding product portfolio will enable the company to achieve strong performance in the second half of the 2024 fiscal year. Facing the opportunities brought by AI to the semiconductor industry for many years, it is believed that Micron Tech will be one of the biggest beneficiaries.

Revenue Guidance for the Third Quarter to Increase by Over 70% YoY

The performance guidance announced by Micron Tech this time further exceeded expectations.

Micron Tech expects that the revenue for the third quarter will be $6.6 billion, with a fluctuation range of $200 million, equivalent to a guidance range of $6.4 billion to $6.8 billion, representing a year-on-year growth of nearly 71% to 81.3%, far exceeding the nearly 58% growth in the second quarter, and analysts' expectations of a year-on-year growth of nearly 60% to $5.99 billion.

Micron Tech expects the gross margin for the third quarter to be 26.5%, with a fluctuation range of 1.5 percentage points, i.e., a range of 25% to 28%, higher than analysts' expected 20.9%; the EPS for the third quarter is $0.45, with a fluctuation range of $0.07, i.e., $0.38 to $0.52.

HBM Expected to Generate Hundreds of Millions of Dollars in Revenue in 2024 Fiscal Year, Strong Demand for AI Servers Positively Impacting Memory Market

As one of Micron Tech's most profitable products, HBM received good news about new product mass production in the second quarter.

During the performance conference call in the first quarter, Micron Tech CEO Mehrotra optimistically predicted that in the 2024 fiscal year, HBM's revenue will reach "hundreds of millions" of dollars, and continue to grow in 2025. The Micron Tech management hinted at that time that their HBM3E, specially designed for AI and supercomputers, had entered the final quality control stage.

Micron Tech announced last month that it has started mass production of HBM3E. The current capacity of this chip is 24GB, higher than the previous generation chip HBM3's 16GB, with 30% lower power consumption than competitor products, providing over 1.2TB/s of memory bandwidth. HBM3E is expected to be used in the production of NVIDIA's H200, with shipments expected to begin in the second quarter of this year. The H200 is expected to surpass the current H100 and become a pillar of significant revenue growth for NVIDIA.

In the latest financial report announcement, Micron Tech disclosed that mass production of HBM3E has begun in the second quarter, and the product has started to be shipped in large quantities. HBM3E has received strong feedback, with customers reporting a 30% reduction in power consumption compared to competing solutionsIn addition to supplying H200 to NVIDIA, Micron Technology has also made progress in obtaining platform qualifications from multiple customers.

Micron Technology stated that HBM products are expected to bring hundreds of millions of dollars in revenue to the company by the 2024 fiscal year. It is anticipated that starting from the third quarter, the revenue from HBM will have a positive impact on the company's DRAM memory business and overall gross margin.

During the second quarter earnings call, Mehrotra pointed out that due to strong demand, Micron Technology has been benefiting from "strong price increases" in products, driven to some extent by "strong AI server demand." He believes that this trend is "positively impacting pricing across all memory and storage end markets."