Micron Technology, the leading American manufacturer of memory chips, has seen its performance accelerate in the past fiscal quarter, and its results for the current quarter have once again exceeded Wall Street expectations, reflecting the strong demand for high bandwidth memory (HBM) amid the artificial intelligence (AI) boom.
On Wednesday, September 25th, Eastern Time, after the U.S. stock market closed, Micron Technology announced its financial data for the fourth fiscal quarter (hereinafter referred to as Q4) of the fiscal year 2024, which ended on August 29, 2024, and provided guidance for the first fiscal quarter (hereinafter referred to as Q1) of the fiscal year 2025.
1) Key financial data:
- Revenue: Q4 revenue was $7.75 billion, a year-over-year increase of 93.3%, exceeding analyst expectations of $7.66 billion. The company's guidance was between $7.4 billion and $7.8 billion, and the year-over-year growth in the previous quarter was 81.6%.
- EPS: The adjusted diluted earnings per share (EPS) for Q4, under non-GAAP measures, was $1.18, compared to a loss of $1.07 in the same period a year ago. Analysts expected $1.12, and the company's guidance was between $1.00 and $1.16. In the previous quarter, the EPS turned from a loss to a profit of $0.62.
Advertisement
- Operating profit: The adjusted operating profit for Q4 was $1.745 billion, compared to a loss of $1.208 billion in the same period a year ago. Analysts expected $1.58 billion, and the company's guidance was between $1.3 billion and $1.5 billion. In the previous quarter, the operating profit turned from a loss to a profit of $941 million.
- Gross margin: The adjusted gross margin for Q4 was 36.5%, compared to -9.1% in the same period a year ago. Analysts expected 34.7%, and the company's guidance was between 33.5% and 35.5%. The previous quarter's gross margin was 28.1%.
2) Performance guidance:
- Revenue: The revenue for Q1 is expected to be $8.7 billion, with a fluctuation of $200 million, which translates to a guidance range of $8.5 billion to $8.9 billion. Analysts expected $8.32 billion.
- EPS: The adjusted diluted EPS for Q1 is expected to be $1.74, with a fluctuation of $0.08, which translates to a guidance range of $1.66 to $1.82. Analysts expected $1.52.Gross Margin: The adjusted gross margin for the fourth quarter is 39.5%, with a fluctuation of 1 percentage point, equivalent to a guidance range of 38.5% to 40.5%, while analysts expected 37.6%.
Micron's performance in the previous fiscal quarter exceeded expectations across the board, but its guidance for this quarter failed to meet Wall Street's "ultra-high expectations," and the company's stock price has been falling due to limited HBM chip capacity. Some comments suggest that the market sentiment towards Micron has not been very optimistic recently, and Citigroup even stated before Micron's earnings report that many investors expected Micron's performance and guidance.
Micron's performance this time has obviously injected a strong stimulant into stock market investors. After the release of the financial report, Micron Technology's stock price, which closed up nearly 1.9% on Thursday, jumped more than 10% after hours.
This quarter's revenue is expected to set a historical record, and this fiscal year will set a "significant record."
The financial report shows that both revenue and profitability for Micron in the fourth quarter accelerated compared to the previous quarter, and the growth level exceeded Wall Street expectations. Analysts expected a 91% increase in Micron's revenue for the fourth quarter, and Micron was even better, with a growth rate of 93%.
Moreover, Micron's performance guidance is also very strong. Based on the guidance range, Micron estimates that first-quarter revenue will grow by nearly 80% to about 88%, while analysts expect growth of nearly 76%. Micron's expected first-quarter EPS profit range is overall higher than analyst expectations, with the high end of the EPS guidance nearly 20% higher than expected and the low end 9.2% higher.
In the announcement of the financial report, Micron CEO Sanjay Mehrotra attributed the revenue growth in the fourth quarter to AI demand and optimistically expected that first-quarter revenue will set a historical record for a single quarter. He said:
"Strong AI demand has driven the surge in data center DRAM products and our industry-leading HBM. Data center SSD sales led our NAND revenue to a record, with revenue exceeding $1 billion for the first time that quarter."
"We are entering the fiscal year 2025 with the best competitive position in Micron's history. We expect that the first-quarter revenue will set a historical record, and the revenue for the fiscal year 2025 will set a significant record, with profitability also significantly improved."It is projected that the HBM market size will exceed 25 billion by 2025, with increased production of HBM3E 12H at the beginning of the year.
Before Micron's financial report was released, analysts anticipated that one of Micron's most profitable products—HBM, used for AI data processing—would experience strong revenue growth. In the report, Micron indicated that the data center business, where HBM is located, achieved a record annual revenue in fiscal year 2024 and is expected to grow significantly in fiscal year 2025.
Micron estimates that the total addressable market (TAM) for HBM will increase from approximately $4 billion in the calendar year 2023 to over $25 billion by 2025.
In February of this year, Micron began mass production of HBM3E, specifically designed for AI and supercomputers. In this financial report, Micron mentioned the progress of this product, stating that compared to the competitor's HBM3E 8H 24GB capacity solution, Micron's HBM3E 12H 36GB capacity product has reduced power consumption by 20% while providing 50% more DRAM capacity.
Micron expects to increase the production of HBM3E 12H products at the beginning of the calendar year 2025, with a full-year increase in product shipments.
Micron mentioned that the demand for data center solid-state drives (SSDs) continues to be driven by strong AI growth, as well as the recovery of traditional computer and storage markets. The revenue from data center SSDs in the fourth quarter exceeded $1 billion, setting a new quarterly record, and the data center SSD revenue for fiscal year 2024 more than doubled compared to a year earlier.